Capital Lending Network, Inc. are experts in condotel financing and originating non-warrantable condominium mortgages.
- Condotel Financing and Non-Warrantable loans are portfolio non-conforming loans
- Condotels are condominium units in a hotel complex or a condo in a condo complex that has daily, weekly, or monthly rentals
- Most condotel complexes have a rental office in the lobby
- Most condotel units are fully furnished and are operated somewhat like a luxury suite in a hotel
- A non-warrantable condo is a condominium complex that has over 51% of the condo ownership by investors
- A warrantable condo is a condo complex that has 51% or more of its occupants as owner-occupants
- Buyers of warrantable condos can qualify for a conventional loan
- However, Fannie Mae and Freddie Mac do not allow non-warrantable condos
Capital Lending Network, Inc. offers both non-warrantable and condotel financing.
What is a Condotel?
Condotel is a type of real estate property that combines the features of both a condo and a hotel. Condotels are typically found in resort areas and offer short-term rentals to vacationers. Many condotels also offer on-site amenities such as restaurants, pools, and spa services. If you’re thinking about investing in a condotel, there are a few things you should keep in mind.
First, condotels are often subject to the same rules and regulations as hotels, so it’s important to be familiar with these before you purchase a unit.
Secondly, because they’re usually located in tourist areas, condotels can be vulnerable to fluctuations in the tourism market.
Finally, because they’re often part of a larger hotel, condotel owners may not have as much control over the property as they would if they owned a standalone condo. Despite these considerations, condotels can be a great option for investors looking for a place to vacation and rent out when they’re not using it. If you do your research and choose a property in a stable tourism market, a condotel can be a lucrative and enjoyable investment.
Condotel Lending Guidelines
The following are the minimum guidelines to qualify for a condotel condominium unit:
- The condominium needs to have full functional kitchen, full bathroom, at least one bedroom, and be at least 500 square feet
- There is a 25% down payment requirement for owner-occupant condotels if it is the buyer’s first home and/or second home
- To qualify for the 25% down payment condotel loan program, the borrower cannot have any more real estate properties besides their primary residence
- Investment condotel units require 40% down payment
- If the borrower owns a primary residence and a second property, this third condotel purchase is classified as an investment property
- Therefore, a 40% down payment is required
- Six months reserves in each of the properties the borrower owns
- For example, if the borrower owns a primary residence and this condotel purchase will be the second property, then six months reserves (one month reserves is one month of P.I.T.I.) on the primary residence and the proposed condotel unit will be required
- The reserves does not have to be in cash
- The market value in the pension, 401k, and securities accounts can be used as reserves
- The condotel complex needs to have sufficient positive reserves
- The condo complex cannot have any lawsuits pending
- The minimum credit score required to qualify for condotel financing is 680 FICO
- There are no fixed rate mortgages available
All condotel loan programs and portfolio loan programs are adjustable rate mortgages (ARM). 3/1. 5/1, and 7/1 ARMs.
Non-Warrantable Condominium Lending Guidelines
Capital Lending Network, Inc. offers non-warrantable condominium loans. There are additional non-warrantable characteristics as well, such as an excessive amount of “unsold units,” certain types of pending litigation, and the length of time that the condo board has controlled the building’s owners. The list is lengthy in fact. Homeowner association dues that are paid less than 85 percent of their current amount are also a non-warrantable characteristic. This implies that if more than 15% of condo dwellers are in arrears, conforming mortgages are not available to everyone who lives there or tries to buy there.
This information may come as a shock to homeowners who appear to be well-qualified. Good credit, great income, and a solid down payment may no longer be enough for home buyers or condo owners in a non-warrantable situation. It’s a new reality in lending:
- Any condo complex that is 51% or more investor-owned are classified as non-warrantable condos
- The non-warrantable condominium lending guidelines are similar to our condotel financing guidelines with the exception of the down payment
- The down payment on non-warrantable condos is 20% versus 25% on condotel units
Here are the non-warrantable condo mortgage lending requirements:
- 20% down payment on a purchase and 80% LTV on refinances
- The condo unit needs to be at least 500 square feet, have at least one bedroom, have a full functional kitchen, and a full bathroom
- There cannot be any litigation against the condo complex
- Adjustable rate mortgages only (ARM)
- The margin is based on the one year treasuries (CMT)
A condo complex can become warrantable or non-warrantable depending on the type of ownership. Warrantable condos are if the ownership of the condo complex consists of 51% or more of owner-occupant condo owners.
Benefits Of Owning a Condotel
One of the main benefits of owning a condotel is having services like maid service and concierge. In some hotels amenities like a pool, fitness center, parking, dining options, and recreational activities.
The second main reason why people want to own a condotel is additional income. Some condotels can be rented out for a long term or short term using Airbnb or Vrbo. The receptionist at the front desk in the hotel can manage rental at the market price. In exchange, some hotels will keep from 20% to 40% of the rented amount for managing the space, doing laundry, and providing full service for the person who rented it out.
Condotel Lenders Who Finance Condohotels
Few banks offer mortgages for non-warrantable condos and condotels, but there are banks that do. Rates typically run a half-percent higher than for a comparable conventional mortgage, and minimum downpayments start at 20 percent.
However, obtaining approval is straightforward.
- Income
- Assets
- Credit score
That’s all there is to it. There are some building concerns, too, but they’re not nearly as difficult as what Fannie or Freddie would demand of you. The building standards are more concerned with ensuring that the structure is well-built and insured than anything else. Condominiums and condotels that are reputable will pass the test. Furthermore, because small lender underwriters handle mortgage approvals (as opposed to those of a big bank), mortgage loan approval periods are considerably rapid. It’s perfectly acceptable to close on a non-warrantable condo or condominium in less than 30 days. With condotels and non-warrantables, the standard timeframe for completion is between 10 and 20 days.
Things to Keep in Mind When Applying for Condotel Financing:
1. Know the Regulations:
Each state has different regulations surrounding condotels, so it’s important to be aware of the rules in the state where you’re looking to purchase a property.
2. Understand the HOA:
Most condotels are managed by a Homeowners Association (HOA). It’s important to understand what the HOA fees cover and what restrictions they may have in place.
3. Be Prepared for Higher Interest Rates:
Because condotel financing is typically done with short-term loans, interest rates will be higher than they would be for a traditional mortgage.
4. Know the Risks:
As with any type of real estate investment, there are risks involved with condotel financing. Be sure to do your research and understand the risks before making any decisions.
Condo Hotel Mortgage Loans in Indiana, Georgia, Florida, California, Illinois, Texas, Michigan, are becoming increasingly popular these days.
- I can help individuals with bad credit buy a house.
- However, condominium hotel mortgage lending is a different story.
- Many people are interested in purchasing a Condo Hotel in California and Florida, and one of the questions I’m frequently asked is whether decent credit is required to take out a condo hotel mortgage.
- Yes, you can.
- This year I’m seeing a significant rise in the number of Condotel Mortgage Loans being processed in California and Florida.
- In the process of qualifying for a mortgage loan, I can handle individuals with credit scores as low as 500 FICO who have open obligations if they’ve been paying their bills on time for 6 months.
- I’m an expert at condominium hotel mortgage loan programs, and I specialize in assisting mortgage borrowers with bad credit histories, such as bankruptcy, foreclosure, judgments, accounts receivable orders, charge-offs, and tax liens.
Program for Condohotel Loans
The Condotel Loan Program provides 30-year adjustable rate mortgages with terms that can be adjusted according to the borrower’s needs.
The following condotel financing:
- Condo Hotel Mortgage Cash-Out Refinance Program
- Condo Hotel Mortgage Rate and Term Refinance Program
- Condo Hotel Purchase Mortgage Loan Program
Whether the Condo Hotel is a second home or an investment property influences how much mortgage interest rates will be.
The Requirement for Condo Hotel Mortgage Financing
The maximum Loan to Value for a second home or investment Condotel purchase loan is 75%, and a 680 credit score is required.
- There’s no need to be concerned if you don’t qualify for a Condo Hotel mortgage because your credit scores aren’t at least 680 FICO.
- I’ll work with you to improve your credit scores.
- There are several ways to improve your grades, and it might take a few days or a few months to notice an improvement.
- There is no cost for repairing your credit or increasing your credit scores.
Do you live in a Condo Hotel unit without a mortgage and want to refinance your mortgage? If so, we can help! We will match your financing needs with reputable lenders who cater to investors.
- There are a lot of Condo Hotel owners in Florida, Illinois, California, Ohio, Virginia, New Jersey, Alabama, and Kansas who own a Condotel Unit.
- Many people want to refinancing so they may acquire another condominium hotel or for other reasons.
- But they’re having a hard time getting a Condotel loan.
- Banks like Bank of America, J.P. Morgan Chase, and Wells Fargo used to offer Condo Hotel loans, but they no longer do so.
- Despite the fact that condotel unit homeowners have a fantastic banking connection with their existing lender, they are much more likely to seek a Condotel refinance loan.
- There are many Condo Hotel homeowners who are unable to refinance their high-rate loans and have no option but to stay in their homes.
- You’ve come to the right place, people.
Mortgage Lenders for Condo Hotels
Condo Hotel Financing with FHA Lend is well-versed in many states. We provide a variety of loan options, including Condotel Purchase, Refinancing, and Cash-Out Refinancing. In this blog post, we’ll look at cash-out refinancing for condo hotels.
Refinance Condotel Programs
There are two Condotel Cashout Refinance Programs for those who own their California or Florida Condo Hotel free and clear (without a Condotel Mortgage).
- The first Condotel Refinance Program is for people who own a Condotel and are seeking to refinance their home.
- If your property is in one of these three categories, FHA Lend can assist with a cash-out refinance that entails up to 75% Loan To Value.
- Obtainable for a short-transition period, these loans are 30-year adjustable rate mortgages (ARMs) with a shorter maturity average.
- 500 square feet is the minimum requirement for units.
A condominium needs at least one bedroom and a full kitchen.
Condotel Refinance Loan Program for Investors
Borrowers who own several units or other properties and are classified as investment Condo Hotel Cash-Out Refinance Programs can take advantage of the second Condotel Refinance Program.
- I can get borrowers up to 60% LTV on a cashout refinance for an investment Cashout Refinance.
- We can negotiate refinance terms for high-credit borrowers because Condotel Loans are portfolio loans.