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Condominium Purchase Loans
I would like to purchase condominium units as an investment. What do I need to do to qualify for condominium loans? What types of investment loans are available for condominiums? Can you explain the difference between non-warrantable and warrantable condominiums? Also, how much down payment do I need? Lastly, what are the eligibility requirements for condominium loans?
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Eligibility For Investment Loans In Condominiums
Credit and Income: You need a good credit score of 680 or above + verifiable income.
Down Payment: It is usually 20-25% for investment properties.
Debt-to-Income Ratio (DTI): It should comply with the lender’s policy, generally under 45%.
Types Of Condominium Investment Loans
Conventional Loan: This is the most common type of loan for warrantable condos.
Non-QM Loan: Suitable for non-warrantable condos.
Warrantable vs Non-Warrantable Condo.
Warrantable condo: It meets all Fannie Mae and Freddie Mac guidelines, such as no significant litigation involving the whole building. No litigation on the condominium complex means these condos can be financed through traditional lending institutions such as banks or mortgage companies.
Non-warrantable condos do not conform to one or more rules set forth by FNMA and require special financing programs offered by certain lenders only specializing in this niche market segment.
Requirements For Eligibility
Property Eligibility: The property must meet warrantability criteria for conventional loan programs.
Down Payment: Expect it to range between twenty percent (20%) and twenty-five percentage points (25%).
Reserves: Six months’ worth up to twelve months’ worth may be required depending upon the overall risk assessment conducted during the underwriting process. Various factors are considered, including the borrower’s credit profile, loan amount requested, and relative value of the subject real estate securing transaction.
Contact Gustan Cho Associates – At Gustan Cho Associates, our loan officers are experts in providing financing solutions for condominiums.