Condotel Financing And Non-Warrantable Condos

by martyna
Condotel Financing And Non-Warrantable Condos

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 complex have a rental office in the lobby
  • Most condotel units are fully furnished and is 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.

Condotel Lending Guidelines

The following are the minimum guidelines to qualify for a condotel condominium units:

What are Condotel Lending Guidelines

  • 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.

What are the guidelines for unsecured home loans

  • 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.