Condotel And Non-Warrantable Condo Loans

Condotels And Non-Warrantable Condos

Gustan Cho Associates

Condotel and Non-Warrantable Condo Loans are more popular than ever. Gustan Cho Associates and The Money Store offers condotel and Non-Warrantable Condo Loans in most of the 50 states in the United States.  Condotel and Non-Warrantable Condo Loans are 30 year adjustable rate mortgage portfolio loans.

What Is A Condotel?

A Condotel is a condominium unit that is part of a Hotel but owned by an individual or corporate entity.  For example, there are condominium units in a Marriott or Hyatt Hotel which are privately owned and not owned by the Hotel management.  These individually owned condominium units are called Condotels.

Even though an individual or private entity owns the Condotel unit, the Condotel unit owners need to follow the Condotel Homeowners Association rules with regards to occupancy, rentals, and other regulations.  The Condotel unit owner can turn the management duties to the Condotel Homeowners Association and they can rent, maintain, and manage the Condotel unit.  There are normally no upfront or fixed charges for the Condotel Homeowners Association to manage the Condotel unit.  The HOA will charge a percentage of the rental income of the Condotel unit.  Rental splits are normally high.  Normally a 30% to 50% commission to the Condotel Homeowners Association is very common.

What Is A Non-Warrantable Condominium?

A non-warrantable condominium is a condominium unit that does not qualify for a conforming loan due to being mainly investor owned.  In order to qualify for a conventional condominium mortgage loan, the condominium complex needs to be primarily owner occupied.  At least 51% of the condominium owners needs to be owner occupant residents of the condominium complex.  If more than 51% of the condominium units are rentals and investor owned, then the condominium is considered non-warrantable condominium units and there is no way it is eligible for FHA, VA, USDA, or conventional financing.

Qualifying For Condotel And Non-Warrantable Condo Loans

Not too many lenders will do condotel and non-warrantable condo loans.  Fortunately, if you are looking for a condotel and non-warrantable condo loan mortgage lender, I can help you. Both Condotel and Non-Warrantable Condo Loans have similar mortgage lending guidelines except for the down payment requirement difference.  To qualify for a Non-Warrantable Condo Loan, the minimum down payment required is 20% for owner occupant and second home non-warrantable condos.  To qualify for a Condotel unit purchase mortgage loan, the minimum down payment required is 25% down payment.  For both Condotel and Non-Warrantable Condo loan mortgage programs, the home buyer needs a minimum of a 680 FICO credit score, one years reserve for both the principal residence and the proposed condotel purchase housing expenses, no greater than a 40% back end debt to income ratios, and the condotel and/or non-warrantable condo complex needs to be free of litigation and/or major building violations.

Most Condotel and Non-Warrantable condominium portfolio mortgage lenders will require that the condominium unit be at least 500 square feet with at least one bedroom and a functional kitchen in order to approve the condotel and non-warrantable condo loan.  Minimum loan size is $100,000 and maximum loan size is $3,000,000.

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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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