Below are a few more reminders for condo buyers.
Non-QM Loans for Condos
There is a condo complex near our office that is still 25% owned by the developer. This is a deal-killer for Fannie, Freddie, FHA and Jumbo lenders.
But, we have a Non-QM investor that has no issue with this. So, this is another reminder that the Non-QM channel often provides financing alternatives for condos that do not meet Fannie/Freddie/FHA guidelines.
BUT again – Non-QM financing usually requires at least 20% down, and the rates are 1% to 3% higher than typical Fannie Mae rates.
Owner Occupancy Ratios
Owner occupancy ratios are irrelevant for most owner-occupied buyers. Owner occ ratios only need to be over 50% for investor or FHA financing.
Only the building containing the subject unit needs to be complete. The entire phase and/or complex can still be under construction.
This is another reminder that condos cannot be distinguished from PUDs/Townhouses by appearance alone. What appears to be an old-school townhouse with a garage and small yard can often be a condo.
This is very important b/c it affects the type of financing available and the type of appraisal that is necessary (townhouses are eligible for more favorable financing).
Buyers need to check the specific zoning on the prelim to know for certain what type of property they are viewing. MLS info is often incorrect.
The above subheading links to my April blog that sets out most of the other things that every condo buyer should be aware of: concentration rule, commercial use, higher rates, litigation, etc.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 310167