What is a condominium?

How condominium ownership works

In a condominium, ownership is divided between what you own individually and what you own collectively. You hold title to your unit — generally the interior space, from the walls in — while the land, exterior, roof, hallways, elevators, and shared amenities are owned in common by all unit owners. A condominium association governs the shared property, funded by monthly assessments (HOA dues) that owners pay.

This structure is what distinguishes a condo from other homes. You get the benefits of ownership and building amenities without being solely responsible for the whole structure, but you also share decisions and costs with the association and are bound by its rules and budget.

Condo vs. townhome vs. co-op

The key differences come down to what you own. In a townhome, you typically own the structure and the land beneath it, even though you share walls with neighbors — which is why townhomes are usually financed more like single-family houses. In a condominium, you own the interior and share the rest. In a cooperative (co-op), you do not own real estate at all; you own shares in a corporation that owns the building, along with the right to occupy a unit.

These distinctions are legal, not just architectural — a building that looks like townhouses can be legally organized as a condominium, and that legal structure is what governs financing.

Why the building matters for financing a condo

Financing a condo involves an extra layer that a single-family purchase does not: the lender evaluates not only you but also the condominium project itself. This is called warrantability. Conventional guidelines look at factors like the share of units that are owner-occupied versus rented, whether any single owner controls too many units, the association’s budget and reserves, pending litigation, and the amount of commercial space.

A project that meets the guidelines is “warrantable” and eligible for conventional financing. One that does not is non-warrantable, which is common for brand-new, heavily-rented, or specialty buildings — and those often require portfolio or specialty condo lenders. We work with both, which matters in Florida’s condo-heavy market.

Condos in Florida

Florida has one of the largest condominium markets in the country, from oceanfront high-rises to garden-style communities. That makes the warrantability question especially relevant here, and it means association financial health, insurance, and reserves are worth reviewing early when you are considering a specific building.

As a Florida mortgage broker, New Century Financial Mortgage, LLC can help you understand how a particular condo project is likely to be treated for financing. This page is educational and is not a commitment to lend.

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