This BLOG On Condotel Loan Requirements And Guidelines Was UPDATED On October 29th, 2018
A Condotel is a condominium unit in a hotel complex.
- A certain percentage of hotel units are designated as condotels
- Condotels are sold to private investors or condo buyers who want to use it as primary, second, investment homes
- Fannie Mae and Freddie Mac does not buy condotel loans
- So all condotel financing is funded by portfolio lenders
With the new year comes new Condotel Loan Requirements.
- Condo Hotel units are becoming more popular than ever
- Condotel mortgage loan requests are at an all time high since the real estate and credit collapse of 2008
- Condotel Loan Requirements are different than traditional condo or single family home loan requirements
In this article, we will discuss and cover Condotel Loan Requirements And Guidelines.
Condotel Loans Are Portfolio Loans
Condotel mortgage loans are portfolio loans.
- By portfolio loans, the lender will not be selling condotel mortgages to the secondary market.
- They will be holding the loan in their own portfolio
Condotel Loan Requirements And Guidelines
Condotel Loan Requirements include that the Condotel need to be at least 500 square feet:
- Have a separate kitchen area with a fully functional kitchen
- The condotel units need to have at least one bedroom
- Efficiency or studio Condotel units do not qualify
- There cannot be any major litigation pending and the Condo Hotel cannot be in financial distress such as a pending bankruptcy
- The Condo Hotel cannot have any major structural issues or pending major building violations as well
Condo Hotel Complex HOA needs to be sufficient reserves.
Reserve Requirements
Reserves are another Condotel Loan Requirements.
- We require that you have at least a one year reserve of principal, interest, taxes, and insurance for the subject Condotel unit as well as your principal residence
- The Condotel Loan Requirement is that you have at least three months of reserves in cash or stocks
Remaining nine months can be in retirement funds, annuities, or other assets.
Down Payment Condotel Loan Requirements
Other Condotel Loan Requirements include a minimum down payment of 25% for primary and second homes.
- Condotel Unit owners who own a primary property and another property and the subject condotel unit is going to be the third property, it will be considered an investment property
- Down payment requirements are different on investment condotels
Higher Down Payment Requirements On Investment Condotel Units
Condotel Loan Requirements with investment condotel units are the same as a second home with the exception it requires more down payment.
- Investment Condotel units require a 60% loan to value
- Reserve requirements are the same
- Investment condotel units have slightly higher interest rates than primary and/or second home condotel units
- Minimum loan size on Condotel loans are set at $100,000
- It can be a lower loan amount on a case by case basis
- There is no maximum loan amount
- The reason there is a minimum loan amount Condotel Loan Requirement is that it takes the same amount of time, the same amount of paperwork and the process is the same to underwrite a $100,000 Condotel mortgage loan as it is a $1 million dollar mortgage loan
Related> Condo Hotel Financing
Condotel Loan Questionnaire
There is a one page Condotel Questionnaire form that needs to be completed by the Condo Hotel Homeowners Association representative that will ask these specific questions.
- Occupancy will be asked
- Any pending litigation will be asked
- Number of units will be asked
Minimum Credit Score And Credit Requirements
Another Condotel Loan Requirement is borrowers need a minimum credit score of 680 FICO.
- One year reserves on a primary residence and other properties including the proposed purchase of P.I.T.I.
- 25% down payment on Condotel Purchase Loans and 75% LTV on refinance mortgages
- 4 year waiting period after bankruptcy and/or foreclosure to qualify for Condotel Financing
Condotel Unit Buyers interested in getting approved for condotel financing, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com.
October 29, 2018 - 3 min read