2015 Guidelines On Condotel And Non-Warrantable Financing

Condotel Financing

Gustan Cho Associates

Condotel and Non-Warrantable Financing are portfolio loans which means that Fannie Mae and Freddie Mac does not purchase them and the mortgage lender who originates and funds the Condotel and Non-Warrantable financing needs to keep the loan on their books.  All Condotel and Non-Warrantable financing loans are adjustable rate mortgages, ARM, and are 30 year mortgages.  We offer 3/1 ARM, 5/1 ARM, 7/1 ARM Condotel and Non-Warrantable financing.  The index is based on the one year treasuries, Cost Maturity Treasuries ( CMT ) and the margin is set at 3.0%.  Will all adjustable rate mortgages, the new adjustment rate after the initial fixed rate cannot be lower than the starter rate.

2015 Underwriting Update On Condotel And Non-Warrantable Financing

There are two parts of underwriting a Condotel unit and Non-Warrantable Condominium.  First, the Condotel or Non-Warrantable Condominim Complex needs to be approved.  Our investor does not want any pending large lawsuit against the Condominium Homeowners Association that is structural in nature or does not want to approve a condominium complex that is under bankruptcy or in financial stress.  No substantial building violations that involves structural issues.  The condominium complex needs sufficient reserves and no more than 10% of the condotel and/or non-warrantable condominium units can be under foreclosure and no more than 10% of the condotel and/or non-warrantable condominium owners can be in default with their homeowners association dues.

In order to get a condotel unit or non-warrantable condominium unit approval, the condotel unit or non-warrantable condominium unit needs to be at least 500 square feet, have at least one bedroom, and have a full functional kitchen.  Minimum loan size for both condotel and non-warrantable financing is $100,000.

2015 Condotel Loan Guidelines

To qualify for condotel financing, the minimum down payment is 25% down payment if the proposed condotel purchase is the borrower’s primary or second home.  If the condotel mortgage loan borrower has a primary home, a second home, and the condotel purchase will be a third home, then the subject condotel purchase will be considered an investment condotel purchase.  With investment condotel purchases, 40% down payment is required.

2015 Non-Warrantable Condominium Guidelines

Non-Warrantable condominiums are condominium complexes where 51% or more of the units are non-owner occupant units and does not meet Fannie Mae and Freddie Mac conforming lending guidelines.  20% down payment is required for non-warrantable condominium purchases as long as it is the borrower’s first or second home.  40% down payment is required if the non-warrantable condominium is an investment property.

Condotel And Non-Warrantable Financing: Borrowers Requirements

To qualify for Condotel and Non-Warrantable Financing, the minimum credit score required is 680 FICO credit scores.  Condotel and Non-Warrantable Condominium mortgage lenders will require one year reserves for each and every property that the borrower owns including the condotel and non-warrantable condominium purchase.  The reserves do not have to be in cash.  It can be in stocks, bonds, and retirement accounts.  Maximum debt to income ratios allowed is 40% DTI.  No bankruptcy, foreclosures, deed in lieu of foreclosures, short sales in the past 4 years.

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The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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