Condotel Loans And Non-Warrantable Condominium Financing

Condotel Loans And Non-Warrantable Condominium Financing

This BLOG On Condotel Loans And Non-Warrantable Condominium Financing Was UPDATED On January 19th, 2019

I am getting many calls from condotel buyers who have purchased condotel units. They have gone through the application process with larger banks but at the end when they were about to close, the bank’s underwriter has denied the condotel loan.

  • These are not local neighborhood banks but larger banks like Wells Fargo, Chase, and Bank of America
  • Cases like these happen often and when it does, it leaves the condotel unit buyer in a serious dilemma
  • Can jeopardize their earnest money and fees that the condotel buyer has already invested such as appraisal fees and other costs

Condotel Loans And Non Warrantable Condo Financing Are Portfolio Loans

Most banks and lenders do not process and underwrite condotel loans and non warrantable condominium financing.

  • When you apply for condotel loans and non warrantable condo financing, you need to make sure the mortgage loan officer, whether a banker, mortgage banker, or mortgage broker, that the subject condominium is a condotel unit and/or a non warrantable condo
  • Most mortgage loan originators should ask you about the condominium complex as well as whether it is a warrantable or non warrantable condo
  • Unfortunately,  some mortgage loan originators accept the mortgage application thinking that their lending institution would have no problem financing the subject condominium
  • I have had situations where the condotel mortgage application even progressed after the lender getting the appraisal
  • But eventually was denied just a week prior to closing where the lender’s Quality Control department denied the loan when everyone was expecting a clear to close
  • Situations like these is unfortunate for everyone and most banks will not make any exception and will just send the borrower away
  • The right thing to do would be for the bank to do the loan as a portfolio loan for the borrower but to this date, I have not yet seen such offer

Condotel Loans: If Denied By Other Lenders

If you have gotten denied for condotel loans by another lender,  please contact me at 262-716-8151 or text us for faster response. Or visit us at at .  I can possibly help you and see if I can close your condotel purchase loan in less than two weeks.

Condotel Mortgage Guidelines

Here are the condotel mortgage requirements:

  • Minimum credit score of borrower 680 FICO and maximum back end debt to income ratio cannot exceed 40% with primary and condotel unit combined
  • Condotel unit needs to have at least one bedroom and kitchen and needs to be at least 500 square feet
  • 75% loan to value for primary, vacation, and second condotel loans:
    • Purchase and refinance
    • 60% loan to value for investment condotel loans
    • Need one year reserves for both primary and condotel unit mortgage payments in cash or liquid assets such as securities, retirement, or other assets
  • Condotel project needs to be financially and structurally stable with no major pending litigation nor serious building code violations
  • Condotel loans and non warrantable condo financing are 30 year adjustable rate mortgage portfolio loans: 3/1 ARM, 5/1 ARM, 7/1 ARM: 
    • Index is based on one year treasuries ( Cost Maturity Treasury ) plus 3.0% MARGIN
    • After the initial fixed rate period, the new rate cannot be lower than the starter rate
    • Starter rate as of 01/03/2014 is 5.0% plus adjustments for condotel borrower
  • Condotel loans are underwritten and approved within 48 hours from the borrower submits the following:
    • Signed mortgage application
    • Condominium Questionnaire 
    • Disclosures
    • Mortgage documents such as tax returns, W-2s, bank statements, and other requested paperwork

Home Buyers or Condotel Unit buyers who need to qualify for mortgage with a direct lender with no overlays, contact The Gustan Cho Team at Loan Cabin at 262-716-8151 or text us for faster response. Or email us at We are available 7 days a week, evenings, holidays, and weekends.

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