Q:

How do you qualify to own a new luxury townhome?

A:

Quick Answer

To qualify for a new luxury townhome, the requirements are putting down a deposit, having good credit and demonstrating the ability to pay mortgage payments. It is a similar process to getting a home loan for a house.

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Full Answer

The main difference between buying a luxury townhome as opposed to a traditional single-family house is that the interest rates are often higher. This means to qualify, the buyer needs to have good credit and the ability to pay a higher mortgage payment. They also require large deposits to qualify in most cases. It is ideal that the buyer has at least 20 percent cash as a down payment, unless he has exceptional credit.

A good loan option for a townhome is to go through the Federal Housing Administration, or FHA. FHA loans tend to be more lenient with the requirements for townhomes and other residences. The FHA loan might have a slightly lower interest rate, not require as much of a deposit and accept lower credit scores within reason.

There are also mortgage calculators that help people determine if they qualify for loans for townhouses. Some things that are used for the calculator include their income and debts, interest rate, amount they can put down, loan term in years and closing costs.

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