The most common criteria that make condos “unwarrantable” (unable to be financed) include: (1) HOA in litigation; (2) more than 10% of units owned by one owner or developer; (3) more than 15% of units are behind on HOA dues; (4) less than 50% of the units are owner-occupied.**
**Owner occupancy ratios are only an issue for investors. Owner occupied buyers do not need to worry about owner-occupancy ratios.
We have several lending sources for “unwarrantable” condos, but borrowers must be strong, with a large down payment, excellent credit and lower debt ratios. The loan amounts must be relatively large as well (usually over $300,000).
The loans are ARMs (fixed for 5 years) and the rates for such loans are good, relative to “hard money” alternatives. Rates are not anywhere near as low as Fannie Mae’s best rates. Borrowers, however, need to understand that these are portfolio loans in an alternative lending environment; expectations need to be put in perspective and realistic.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646