Condotel Financing & Non-Warrantable Condo Loan
Looking for condotel financing or a non-warrantable condo loan? Condotel and non-warrantable condo buyers often find problems when it comes to searching for non-traditional financing. We often see borrowers being told by lenders that they can do the loan and often get denied during the underwriting process because of the property type.
Cash Out and Purchase Options
- We have cash out options for borrowers that bought condos with cash or want to cash out with favorable terms.
- Have purchase options for condotel and non-warrantable condos for future purchases.
- Work with someone who can make the process as simple as possible and close in a timely fashion for a condotel loan and non-warrantable condo loan.
In the mortgage industry, it is important to talk to the right person in order to make the underwriting and loan process simple. So many times we see borrowers frustrated with the loan process and giving up with a lender because they had a bad experience with their service.
Condotel Financing and Non-Warrantable Condo Loans are Portfolio Mortgages
These types of loans are hard to find financing for because not very many banks and residential lenders will underwrite loans for condotels and non-warrantable condos. Loans that do not meet the complex rules that are associated with the qualified mortgage rule are considered non-qualified mortgages or portfolio loans.
- Loan Originators can be mistaken due to the extent of guidelines and not realize that their lender does not finance condotel units and non-warrantable condos.
- Every purchase has a deadline and often the denial does not come until time and money have been invested.
- Some lenders do not have a solution and just dismiss the borrower saying they cannot help them.
What is a Condotel?
Condotels are condominium projects, which are individually owned and operated as a hotel.
- Minimum down payment of 15%.
- Available financing for vacation and 2nd homes up to 85% loan to value to $3,000,000.
- On a case by case scenario, even if the rental income is claimed on the schedule E, the property can be classified as a second home.
- Available financing for investment properties up to 85% loan to value to $3,000,0000.
- Cash out options available for investment, vacation, and 2nd homes up to 70% loan to value.
- Weekend, daily, nightly, rentals.
- High investor concentration.
- Individuals and entities owning more than 10% of units.
- Has not been turned over to the home owners association.
- Can be the 1st unit and loan in the complex.
What is a Non-Warrantable Condominium?
Non-warrantable condos do not have a main desk and are not operated like a hotel.
- Minimum down payment of 15%.
- Financing for secondary and vacation home up to 85% loan to value to $3,000,000.
- Can still count the money as rental income and be classified as a vacation or 2nd home even if the borrower uses the property.
- Financing for investment of up to 85% loan to value to $3,000,000.
- Cash out for second home, investment, and vacation of up to 70% loan to value.
- High Investor concentration.
- Can own more than 10% of units if individual or entity.
- Allow the condo be the 1st financed condo in the complex.
Qualifying for a Condotel Loan and Non-Warrantable Condo Loan
- Minimum FICO score of 500 is required.
- For second home and investment proprieties the maximum debt to income is 50%.
- Allow stated income business loan.
- Allow asset depletion – can use savings, checking, retirement, 401k, IRA, etc… as income.
- Units need to be at least 475 square feet.
- Must have full kitchen and separate bedroom.
- Subject property has to be 100% residential.
- Project/building must be greater than or equal to 50% commercial, which is determined by appraiser.
- The minimum loan amount is $100,000 and maximum loan amount is $3,000,000