Condotel Financing And NON-Warrantable Condominium Loans

This BLOG On Condotel Financing And NON-Warrantable Condominium Loans Was UPDATED On December 4th, 2018

Gustan Cho Associates partners with realtor partners nationwide.

  • Many veteran real estate agents remember how hot condotel units were
  • Especially throughout the state of Florida followed by California
  • Many realtors are still under the belief that condotel and non-warrantable condominium financing is extinct

Gustan Cho Associates Mortgage Group are experts in condotel and non-warrantable condominium mortgage loans.

  • The condotel financing market has dried up since the real estate and credit collapse of 2008
  • Large banks such as JP Morgan Chase, Wells Fargo, Citibank, and Bank of America has stopped lending on condo-hotel units
  • The abrupt halt in condotel and non-warrantable condominium financing by lenders have forced Florida and California realtors to only entertain cash offers to condo-hotel unit buyers
  • Great news for Florida and California real estate agents is that The Gustan Cho Team at Loan Cabin Inc. now offers condotel financing to qualified condotel unit buyers
  • We also offer refinance condotel loans for condotel homeowners

In this article, we will discuss and cover the qualification requirements for condotel and non-warrantable condo financing.

Condotel Financing In Florida And California

What Condotel Means Financing and Non-Guaranteed Home Loans

Gustan Cho Associates is licensed in multiple states. However, Condotel and Non-Warrantable Condos are extremely popular in both the states of Florida and California. Florida is the birth of condo hotels and there are thousands of condotel units throughout the state of Florida.

Condotel loans are portfolio loans and we now offer 30-year condotel financing via:

  • 3/1 ARM
  • 5/1 ARM
  • 7/1 ARM

The index is based on the Cost Maturity Treasury (CMT):

  • One year treasuries (CMT)
  • The margin is at 3.0%

Condotel Financing Guidelines

Here are the basic qualification requirements:

Condo Hotel Complex needs to qualify:

  • No major litigation and the condo-hotel complex
  • Complex needs to be in good financial shape with no major building violations or structural issues

Condotel unit needs to qualify:

  • Have at least one bedroom
  • No studios
  • A full-sized functional kitchen which includes
    • Dishwasher
    • Full-size refrigerator
    • Stove
  • Condotel Unit needs to be a minimum of 500 square feet
  • Condotel Financing buyer needs to have a minimum of 680 credit scores
  • Maximum borrower’s back end debt to income ratios needs to be no greater than 43%
  • Minimum down payment of 25% for primary, second home, and vacation home condotel financing
  • Minimum down payment of 40% for investor condotel financing program
  • 75% loan to value for refinancing and cash-out refinance for second/vacation condotel financing
  • One year reserve for both primary residence and condotel unit housing payments
  • Reserves do not have to be in cash

IRA, 401k, securities, and other forms of liquidable assets can be used to meet one-year reserve requirements.

Non-Warrantable Condominiums

Which means unqualified condominiums

Non-Warrantable Condos are condos in a condominium complex that is comprised of 51% or more investor-owned units.

  • There is no way of telling whether a condo complex is warrantable and/or non-warrantable
  • The condo homeowners association is the department that can tell condo buyers whether or not a condo is warrantable and/or non-warrantable
  • A condo complex can go from warrantable to non-warrantable depending on the owner-occupancy
  • Fannie Mae and Freddie Mac does not allow non-warrantable condominium financing
  • Gustan Cho Associates can help home buyers of non-warrantable condominiums

Here are the non-warrantable financing guidelines at Gustan Cho Associates:

  • Condo unit needs to be at least 500 square feet
  • Have at least one bedroom
  • Full-size kitchen
  • No pending lawsuits against the condo association
  • 20% down payment
  • 80% loan to value on cash-out refinances
  • 680 borrower credit scores
  • One year reserves on PITI on both primary residence and/or other properties borrowers own

Home Buyers of condotel units and/or non-warrantable condos who need financing, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at [email protected] We are available 7 days a week, evenings, weekends, and holidays.

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