Condos · 5 min read
Why is the mortgage rate on a condo higher than on a house?
September 29, 2026 · Written by Bill Egan, NMLS 7342
Short answer
An attached condo often prices higher than a house because Fannie Mae and Freddie Mac add a fee for that property type. The fee is a percentage of the loan amount, and the lender usually builds it into the rate. On Fannie Mae’s price sheet the big fee is three-quarters of a point when you put down less than 25 percent. At 25 percent down it drops to one-eighth of a point. It is not a sign that your file is worse.
01
Why this comes up
You got a quote on a condo and a quote on a house, and the condo rate was higher. Same credit. Same down payment. Nobody explained why. You are worried the lender added something, or that condos are just harder to finance.
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Where this goes wrong
You put 20 percent down because you heard that removes the extra cost. It does not. Twenty percent down means you are still borrowing 80 percent of the price, and that is still in the higher condo-fee bucket. Or you drain savings to reach 25 percent down and then cannot cover closing costs. Or a standalone condo — a condo that is a detached house, not an attached unit — gets priced as if it were attached. The building can also be the problem. A higher rate does not matter if the association will not pass review and the loan cannot close.
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What we do about it
We price the condo and a house with the same credit and the same down payment, so you can see the difference in dollars. Fannie Mae and Freddie Mac are the two companies that set the rules for most conventional loans. They publish a fee, called a loan-level price adjustment, for certain loan features. An attached condo is one of those features. On Fannie Mae’s price sheet, that condo fee is 0.75 percent of the loan amount when you borrow more than 75 percent of the price. That is less than 25 percent down. At 25 percent down, you are borrowing 75 percent, and the fee drops to 0.125 percent. It stays at that smaller number until you put about 40 percent down, where this condo fee goes to zero. A detached condo is not charged this condo fee. We will tell you which one you are buying before you stretch the down payment to chase it.
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How to get ready
Ask if the quote is for an attached condo. Ask for the payment at 20 percent down and at 25 percent down, with the condo fee included. Do not empty the account you need for closing costs just to erase a small fee. If the unit stands alone, ask us to confirm it is priced as a detached condo. And ask early whether the building itself is acceptable, because the rate is only half of the condo question.