Condotel and Non-Warrantable Condo Loans Mortgage Guidelines

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This article will cover condotel and non-warrantable condo loans and mortgage guidelines. Condotel and non-warrantable condo loans are more popular than ever.

Condotel and non-warrantable condo loans are becoming increasingly popular in Hawaii, Florida, North Carolina, South Carolina, and California like never before. Condotel financing and non-QM mortgage lending is making a huge comeback after years being dormant. The team at FHA Bad Credit Lenders are experts in condotel and non-warrantable condo loans.

FHA Bad Credit Lenders offers condotel and non-warrantable condo loans in most states in the United States. Condotel and non-warrantable condo loans are 30-year adjustable-rate mortgage portfolio loans. In this article, we will discuss and cover condo-hotel and non-warrantable condo loans.

Condotel And Non-Warrantable Condo Loans: What Is A Condotel?

A Condotel is a condominium unit that is part of a Hotel but owned by an individual or corporate entity. For example, condominium units in a Marriott or Hyatt Hotel are privately owned and not owned by the Hotel management.

These individually owned condominium units are called Condotels. Even though an individual or private entity owns the condotel unit, the condotel unit owners need to follow the Condotel Homeowners Association rules about occupancy, rentals, and other regulations. The condotel unit owner can turn the management duties to the Condotel Homeowners Association, and they can rent, maintain, and manage the condotel unit.

There are normally no upfront or fixed charges for the Condotel Homeowners Association to manage the Condotel unit.  The HOA will charge a percentage of the rental income of the Condotel unit. Rental splits are normally high. Normally a 30% to 50% commission to the Condotel Homeowners Association is very common.

What Is A Non-Warrantable Condominium?

A non-warrantable condominium is a condominium unit that does not qualify for a conforming loan due to being mainly investor-owned.

The condominium complex needs to be primarily owner-occupied to qualify for a conventional condominium mortgage loan. At least 51% of the condominium owners need to be owner-occupant residents of the condominium complex.

Suppose more than 51% of the condominium units are rentals and investor-owned. In that case, the condominium is considered a non-warrantable condominium unit, and there is no way it is eligible for FHA, VA, USDA, or conventional financing.

Qualifying For Condotel And Non-Warrantable Condo Loans

Not too many lenders will do condotel and non-warrantable condo loans. Fortunately, if you are looking for a condotel and non-warrantable condo loan mortgage lender, I can help.

Condotel and Non-Warrantable Condo Loans have similar mortgage lending guidelines except for the difference in down payment requirement.

To qualify for a Non-Warrantable Condo Loan, the minimum down payment is 20% for owner-occupant and second-home non-warrantable condos. To qualify for a Condotel unit purchase mortgage loan, the minimum down payment required is a 25% down payment.

Eligibility Requirements For Condotel and Non-Warrantable Condo Loans

Condotel and non-warrantable condo loans are non-QM loans. Non-QM loans are portfolio loans. Fannie Mae and Freddie Mac do not purchase non-QM loans.

Condotel and non-warrantable loans are often referred to as non-conforming loans since they do not conform to Fannie Mae and Freddie Mac agency guidelines. FHA Bad Credit Lenders has many non-conforming wholesale mortgage lenders. However, not every wholesale mortgage lenders has the same guidelines on condotel and non-warrantable condo loans.

We will list benchmark general mortgage guidelines on condotel and non-warrantable condo loans. For both Condotel and Non-Warrantable Condo loan mortgage programs, the home buyer needs the following:

• Benchmark minimum of a 680 credit score
• A lower credit score is acceptable but may require a larger down payment
• In general, condotel unit loans require a 25% down payment for owner-occupant and second-home condotel units
• Non-Warrantable condominium units normally require a 20% down payment for an owner-occupant and second-home condo units.
• One year’s reserve for both the principal residence and the proposed condotel purchase housing expenses
• No greater than a 40% back-end debt-to-income ratios
• Condotel and non-warrantable condo complex needs to be free of litigation or major building violations

Most Condotel and Non-Warrantable condominium loan portfolio mortgage lenders will require that the condominium unit be at least 500 square feet. The condotel or non-warrantable condominium unit needs to have at least one bedroom and a full size functional kitchen to approve the condotel and non-warrantable condo loan.  The minimum loan size is $100,000, and the maximum is $3,000,000. If you need to qualify for a condotel and non-warrantable condo loans, please get in touch with us at FHA Bad Credit Lenders at 262-716-8151. Text us for a faster response. You can email us at gcho@gustancho.com. The team at FHA Bad Credit Lenders is available seven days a week, evenings, weekends, and holidays.