You can refinance a condo in Arizona, but the lender has to approve two things: you and the building. A condo refinance can stall for reasons that have nothing to do with your credit, like low HOA reserves, unpaid dues across the building, or a pending lawsuit. Here is what lenders check in Scottsdale, Phoenix, and the rest of Metro Phoenix, how a condo changes your price, and what to do if the building does not qualify.

What the lender checks in your HOA

A condo loan is secured by your unit, but the unit depends on the health of the whole building. If the association is broke or tied up in a lawsuit, the lender worries the unit will lose value. So the file includes a project review, and the standards come from Fannie Mae and Freddie Mac for conventional loans.

The table shows the items lenders usually look at. The thresholds are typical for conventional loans. Each lender and each program can be stricter, and the rules have changed recently, so read our post on the Fannie Mae condo rule change in Arizona for the latest.

Your credit can be perfect and the refinance can still stop at the HOA. Find out about the building first.

Lenders get this information from an HOA questionnaire, which the association or its management company fills out. There is often a fee of a few hundred dollars, and it can take one to three weeks to come back. That wait is the main reason condo refinances run longer than house refinances.

How a condo changes your rate

A condo can price slightly higher than a house, especially when you have less equity. Lenders sometimes add a price adjustment for condos at higher loan-to-value ratios. It is usually a fraction of a point, and it shrinks as your equity grows. Here is what a small change does to the payment on a $320,000 balance. These are illustrations of principal and interest on a 30 year loan, not quotes.

The same table works in the other direction. If you are at 7.75% today and can refinance to 7.25%, you save $110 a month. If the refinance costs $5,000, you break even in about 46 months. That is a good deal if you will keep the loan for more than four years, and a bad one if you may sell in two. Our guide to the refinance break even point in Arizona shows how to run that test on your own numbers.

Use the calculator below to see how a different price or rate moves the payment. It shows a purchase payment, which is a useful way to test a scenario, and the numbers are estimates only.

Run your own numbers

The appraisal and the timeline

A condo appraisal compares your unit to similar condos, usually in your building and nearby. That is one more reason the building matters. If recent sales in the complex are weak, the value can come in lower than you hoped, which raises your loan-to-value and can raise your rate. Some condos qualify for an appraisal waiver and many do not, and our guide to when you can skip the appraisal on a refinance explains the idea.

The best way to save time is to start the HOA paperwork on day one. Ask your management company for the questionnaire, the current budget, the master insurance certificate, and the latest meeting minutes. Having them ready can shave weeks off the timeline. If the management company is slow, call the board president or the property manager directly, and keep a written record of every request. A condo owner in a Scottsdale or Phoenix building with an absent manager can lose a rate lock waiting on a single signature, so ask your loan officer how long the lock should run before you commit.

It also helps to know your own numbers before you start. Pull your current mortgage statement, your latest HOA dues notice, and your homeowners policy. The lender will ask for all three, and a missing page is a common cause of a delay that has nothing to do with the building.

FHA, VA, and streamline options

If your current loan is FHA or VA, a streamline refinance can ask for less than a new conventional loan. Rules for condo projects can be lighter on a streamline, but they vary by lender and program, so confirm before you assume. HUD publishes its program rules on the HUD website, and the VA explains its loan options on va.gov. We cover the details in our guides to the FHA streamline refinance in Arizona and the VA streamline refinance IRRRL in Arizona.

If your building does not qualify

A non-warrantable condo is one that does not meet conventional standards. It might have too many rentals, a lawsuit, low reserves, or too many unpaid dues. You still have options, but they cost more. Portfolio and non-QM lenders will look at these buildings, usually with a larger equity requirement, often 25% or more, and a higher rate.

The other option is to wait. If the HOA is settling a lawsuit, building reserves, or collecting past due fees, the building may qualify in a year. Our guide to condo financing in Arizona explains warrantable and non-warrantable condos in more detail, and it is worth reading before you decide.

Condos in the Valley right now

Condo values in the Valley have been softer than house values, and our report on Phoenix condo prices at a three year low covers what that means for owners. Lower values can mean less equity, and less equity can mean a higher rate or a smaller cash-out. That does not make a refinance a bad idea, but it makes it more important to check the numbers.

If you own or want to own a high-end condo, Arizona Luxury Property Search lists luxury properties in Scottsdale and nearby. You can see the products we shop on our loan programs page, learn who we are on the about us page, and walk through the steps on our process page. You can also start at pillarmortgagegroup.com. For general guidance on shopping for a mortgage, the Consumer Financial Protection Bureau has a useful owning a home resource.

Frequently asked questions