That being said, there are still 20% down payment loans for condos. Your bank more than likely changed its parameters with condos and stated 25% down only. This is definitely an internal choice.
With our pricing, 20% down investment property will cost an additonal 1.25% in points for the same interest rate offered for 25%. Reason being? Riskier loan. More difficult to sell on the secondary market. Add the even riskier condo attachment even more difficult.
Townhouses or PUDs (Planned Unit Development) are different from condos and are treated differently by lenders and even FHA. FHA does not require a PUD to be approved where as a condo project has to go through a complete HOA project analysis. The industry feels that condos are riskier than PUDs.
It would benefit you greatly to work with an indirect lender (either a mortgage broker or banker) who can offer you more than one financing choice.