Non-Warrantable Condominium Mortgages

Non-Warrantable Condominium Mortgages

Dale Elenteny The Mortgage Expert
May 28, 2018 - 3 min read
Gustan Cho Associates are mortgage brokers licensed in 48 states
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This BLOG On What Are Non-Warrantable Condominium Mortgages Was UPDATED On May 28th, 2018

Non-Warrantable Condominiums are condominium units that are in a condo building or complex that does not conform to conforming mortgage lending guidelines. Conventional Loans are called conforming loans because they conform to Fannie Mae and/or Freddie Mac Guidelines.

  • Non-Warrantable condo units do not follow FHA, Fannie Mae, Freddie Mac, VA, of USDA mortgage lending guidelines due to many factors

One of the biggest factors, whether a condominium is warrantable or non-warrantable, is the following:

  • owner occupancy versus the investor occupancy percentage of the condominium building and/or condominium complex
  • If 51% or more of the ownership of the condominium units are owner occupant condominium units, then the condominium building is classified as a warrantable condominium
  • With warrantable condos, conforming financing is allowed
  • If 51% of the condominium units in the condominium building is owned by investors where they are rental units, it is classified as non-warrantable condominium units
  • Condo units are not qualified for conforming financing
  • Non-warrantable condominium buyers who need non-warrantable condominium mortgages, Gustan Cho Associates Mortgage Group are experts in alternative financing

Gustan Cho Associates Mortgage Group are experts and specialists in Condotel Financing and non-warrantable condominium mortgages.

Guidelines On Non-Warrantable Condominium Mortgages

Which mortgages are not covered by the guarantee

There is no cap on investor concentrations on non-warrantable condominium mortgages.

  • On home purchase and refinance non-warrantable condominium mortgages, as long as they are second or vacation homes, minimum loan to value caps are at 80% LTV
  • On cash-out refinance non-warrantable condominium mortgages, the loan to value reduces to a 75% loan to value cap
  • A single person or entity on the non-warrantable condominium unit is allowed to own 10% or more of the condominium units
  • Minimum credit scores for the non-warrantable condominium mortgage loan borrower cannot be lower than a 680 credit score
  • Foreign Nationals can qualify for Condotel and Non-Warrantable Condominium mortgages
  • Our Foreign Nationals Loan Program requires they have a valid work visa and have employment in the United States through the work visa
  • No credit scores are required

In this article, we will discuss and cover Non-Warrantable Condominium Mortgages.

Condotel And Non-Warrantable Condominium Mortgages With Portfolio Loan Program

All Condotel and Non-Warrantable Condominium Mortgages are 30-year ADJUSTABLE RATE MORTGAGES, also referred to as an ARM.

  • The index is based on the one year Cost Maturity Treasuries, also commonly known as the CMT
  • The margin is fixed at 3.0%

The adjustable-rate mortgages offered are:

  • 3/1 ARM
  • 5/1 ARM
  • 7/1 ARM

Starter rates are in the 5.0% to 6.0% range:

  • Mortgage Rates cannot be lower than the starter rate when the fixed-rate ARM period is over and the adjustment period starts
  • The non-warrantable condominium building cannot be under serious litigation
  • Cannot have structural issues or building violation
  • HOA needs to have ample reserves
  • Cannot have more than 10% of the units in foreclosure
  • The individual condominium unit needs to be at least 500 square feet
  • Needs to have a full-size functional kitchen and at least one bedroom
  • Minimum mortgage loan size is $150,000
  • There is no maximum mortgage loan size
  • The borrower needs to have at least one year reserve for the principal residence, the subject purchase property as well as any other investment properties
  • Reserves do not have to be in cash

Retirement funds and other liquidable securities can be used for reserve requirements.

Condotel Financing

Why condotel type housing mortgages and not covered by the warranty with the portfolio loan program

Gustan Cho Associates Mortgage Group offers condotel financing. Mortgage Guidelines on condotel financing are exactly the same with regards to credit, condo unit, and condo complex lending guidelines. The only difference is that the down payment requirements are 25% for first and second homes. Any condotel unit buyer who owners at least two properties and are purchasing the third condotel property, it is considered an investment condotel purchase. With an investment condotel unit purchase, a 40% down payment is required. Feel free to contact us at Gustan Cho Associates Mortgage Group at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com.

Dale Elenteny is a veteran licensed senior loan officer with NEXA Mortgage, LLC dba as Gustan Cho Associates. Dale has over two decades of mortgage experience. Dale Elenteny has worked both in the wholesale and retail section of the mortgage industry. As a wholesale account executive, Dale has helped countless of loan officers who needed help with guidelines or on how to structure a deal. His passion of helping families realize the dream of home ownership become a reality was the reason he is now in retail. Over 75% of Dale’s borrowers are folks who could not qualify at other lenders. However, Dale helps these folks in preparing them qualify for the best mortgage program and help buyers qualify for a mortgage. Dale has helped countless of home buyers and has been a mentor to hundreds of loan officers.

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