Condo Hotel Unit Mortgage Loans And Non-Warrantable Condo Financing

This BLOG On Condo Hotel Unit Mortgage Loans And Non-Warrantable Condo Financing Was UPDATED On October 1st, 2017

Condotels used to be extremely popular in the early and mid 2000’s in Florida and other vacation hot spots like California, Hawaii, Texas, Georgia, Ohio, Alabama, Kansas, Utah, Arizona, Nevada, and Chicago.

  • However, after condo hotel unit mortgage loans came to an abrupt halt by major banks.
  • Big banks such as JP Morgan Chase, Wells Fargo, Citibank, and Bank of America, Condo Hotel purchases came to an abrupt halt in financing condotel units after the 2008 Great Recession. 
  • Condotel purchases were just limited for cash Condo Hotel unit buyers since Condo Hotel unit mortgage loans were not available by any lenders. 
  • Even portfolio mortgage lenders did not want anything to do with them. 
  • For those Condo Hotel unit owners who got financing prior to the 2008 real estate and credit meltdown, they were pretty much stuck with the rates they had and had no refinance option. 
  • Condotel mortgage lenders such as Chase, Wells Fargo, Citibank and Bank of America would not refinance their existing Condo Hotel unit mortgage loans.
  • These banks will not make exceptions on refinancing their current condotel borrowers even when they had premier bank clients and their clients were never late in paying their Condo Hotel unit mortgage loans. 
  • The good news is that The Gustan Cho Team at USA Mortgage offers Condo Hotel unit mortgage loans at competitive rates.

Types Of Condo Hotel Unit Mortgage Loans

For those who are seeking purchase and/or refinance Condo Hotel unit mortgage loans, USA Mortgage, a division of DAS Acquisition Company LLC NMLS 227262 has condotel financing programs:

  • 75% loan to value adjustment rate mortgage loans. 
  • 30 year loan programs: 3/1  ARM, 5/1 ARM, and 7/1 ARM amortized over 30 years. 
  • The index is based on the one year treasuries ( Cost Maturity Treasuries CMT ) with a margin of 3%. 
  • The adjustment rate cannot be lower than the starter rate. 
  • The Condotel unit needs to be at least 500 square feet and needs to be at least a one bedroom condotel unit with a functional kitchen. 
  • The Condo Hotel project needs to be in good financial standing as well as in good condition with no pending major litigation nor building violations.

Non-Warrantable Condominium Financing

Any condominium complex that has 51% or more of the units that is owned by investors is considered non-warrantable condo complex. Fannie Mae and Freddie Mac will not purchase any non-warrantable condo loans. The Gustan Cho Team at USA Mortgage offers financing for non-warrantable condominiums. Here are the basic requirements:

  • 20% down payment on first and second homes
  • 40% down payment on investment home loans
  • 30 year loans but adjustable rate mortgages: 3/1 ARM, 5/1 ARM, 7/1 ARMS
  • Condo unit needs to be at least 500 square feet
  • At least one bedroom and functional full kitchen: No Studios
  • 680 Credit Scores

Minimum Borrowers Qualifications

Condo Hotel Unit Borrowers need to have a minimum credit score of 680 FICO with no late payments in the past 12 months and no bank overdrafts in the past 12 months.

  • The maximum debt to income ratio requirement is no greater than 40%. 
  • However, we can be creative when it comes to qualifying income. 
  • We can use our asset depletion program where we can calculate additional income from the borrower’s asset which can include retirement funds, investment accounts, and real estate holdings. 
  • If the Condotel unit mortgage loan borrower owns other investment properties, we can use real estate depreciation as additional income. 
  • Condo Hotel Unit Mortgage Loans are underwritten within 24 hours of receiving all documents and the sign mortgage application. 
  • Most Condo Hotel Unit Mortgage Loans are closed within 21 days of receiving the signed mortgage application and necessary paperwork.
  • Paperwork required are documents such as 2 years tax returns, recent pay check stubs, and two months bank statements.

Condotel Unit buyers interested in getting qualified for Condotel Financing, please contact The Gustan Cho Team at USA Mortgage at 1-800-900-8569 or text us at 262-716-8151 for faster response. Borrowers can also email us at gcho@usa-mortgage.com. We are available 7 days a week: evenings, weekends, holidays as well.

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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