Top 5 Things to Know When Buying a Condo That Impact Your Mortgage Approval

Buying a condo in Ontario can be a smart way to get into the housing market — but it also comes with unique factors that can affect your mortgage approval. Unlike detached homes, condos have shared ownership, monthly fees, and building-level finances that lenders pay close attention to.

Here are the top five things you should know before making your move:

1. Lenders Review the Condo Corporation’s Financial Health

When you buy a condo, your lender isn’t just approving you — they’re also assessing the condo corporation.

• Lenders review the status certificate, which outlines the building’s financials, reserve fund, and any legal concerns.

• If the building has a low reserve fund or upcoming major repairs, lenders may view it as higher risk.

• Poorly managed buildings can even limit which lenders will approve financing or affect your interest rate.

Pro Tip: Always review the status certificate before firming up your offer.

2. Monthly Condo Fees Affect Your Mortgage Qualification

Your condo fees count as part of your debt service ratios, which determine how much mortgage you qualify for.

• Higher fees reduce your borrowing power, even if they include utilities.

• Lenders want to ensure your total housing costs (mortgage + condo fees + property tax + heat) stay within their limits.

Example:A $600/month condo fee could reduce your approved mortgage amount by roughly $100,000 compared to a freehold property with no fees.

3. Property Type and Size Matter

Not all condos qualify for standard financing:

• Small units (often under 500 sq. ft.) can have limited lender options.

• Leasehold condos or co-ops are harder to finance.

• Some lenders avoid buildings with heavy Airbnb use or a high commercial mix.

Before you buy: Have your mortgage broker confirm the building and unit type are acceptable to lenders.

4. Special Assessments Can Impact Value and Financing

If a condo corporation issues a special assessment — where owners must pay extra for major repairs — lenders may flag it as a concern.

• It suggests financial instability within the condo corporation.

• If an assessment is active, some lenders may even decline the deal.

Action Step: Ask your real estate agent or lawyer to check for any upcoming or ongoing special assessments before making an offer.

5. Insurance Requirements Are Different

Condos require two layers of insurance:

• Building insurance (covered by condo fees) protects the structure.

• Unit insurance (your responsibility) covers personal contents, upgrades, and liability inside your unit.

Lenders will require proof of unit insurance before closing, so be sure to arrange this early.

Bottom Line

When you buy a condo, you’re buying more than a unit — you’re investing in the financial health and management of the entire building. Working with an experienced mortgage broker ensures your dream condo also fits your financing plan.

💡 Next Step

Before you make an offer, connect with LaframboiseMortgage.ca to review your pre-approval and confirm the building’s eligibility with lenders. It could save you time, stress, and money down the road.