Financing Condos    Lending Tips info@res-mac.com    800.917.7002
Condo Sales Growth•   According to recent    housing statistics from    Florida Realtors,    existing home and    condo sa...
Financing CondosCondos fall into two categories for financing. Each have their own guidelines in regards to lending.      ...
Warrantable Condos                         Through Fannie Mae• Most of the units are Owner-  Occupied.• For existing condo...
Warrantable Condo Search• https://www.efanniemae.com/sf/refmaterials/approvedprojec  ts/index.jsp• Google “Fannie approved...
Fannie Mae                         Lending Guidelines• 620 middle credit score.• At least 25% down payment  required.• Tot...
Warrantable Condos                                        FHA Approved•   50% or more of the units are Owner-    Occupied....
FHA Approved                   Condo Search•   https://entp.hud.gov/idapp/html/condlook.cfm•   Google “FHA approved condos...
FHA Condo                       Lending Guidelines• 580 credit score minimum, must meet  exact FHA underwriting guidelines...
Non-Warrantable Condos             Break Down Into Two Categories• Credit score above 620.     • Credit score below 620.
Good Credit                      Non-Warrantable Condo• 30% minimum down payment  620-679 credit score• 20% minimum down p...
Bad Credit                        Non-Warrantable Condo• Private investor loan through our  network.• 35-40% down payment ...
Profitable Opportunity• Florida had a very high  condo concentration.• Condos present unique  lending challenges that  can...
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Condo Financing

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Condo Financing

  1. 1. Financing Condos Lending Tips info@res-mac.com 800.917.7002
  2. 2. Condo Sales Growth• According to recent housing statistics from Florida Realtors, existing home and condo sales rose in 2011 by 13% on existing home sales and 29% on existing condo sales, compared to the statistics from 2010.• Condos offer a huge opportunity to increase your overall sales and business as a Real Estate Agent.
  3. 3. Financing CondosCondos fall into two categories for financing. Each have their own guidelines in regards to lending. Warrantable Non-Warrantable
  4. 4. Warrantable Condos Through Fannie Mae• Most of the units are Owner- Occupied.• For existing condo projects, 90% must be sold.• For new construction projects, 70% must be closed or under contract.• No more than 15% of the units can be 30 days behind on HOA dues.• No more than 10% of the project can be owned by a single entity.• HOA must budget at least 10% of income for replacement reserves.• HOA cannot be in control of builder.• This list is not all inclusive.• Warrantable means Fannie-Mae will insure the loan.
  5. 5. Warrantable Condo Search• https://www.efanniemae.com/sf/refmaterials/approvedprojec ts/index.jsp• Google “Fannie approved condos”.• At bottom of page is State list , click on State for pdf of warrantable condos.• Listing Agent should also know if the Condo is Fannie/FHA approved.
  6. 6. Fannie Mae Lending Guidelines• 620 middle credit score.• At least 25% down payment required.• Total debt ratio no greater that 45%, 50% if compensating factors.• Factors include 6 months PITI reserves, higher credit score, verifiable rent for 12-24 months, etc.• HOA condo questionnaire to determine eligibility hasn’t changed. $200 - $400 hard cost to Buyer.• Approve/Eligible DU/AUS findings.
  7. 7. Warrantable Condos FHA Approved• 50% or more of the units are Owner- Occupied.• FHA concentration less than 50%.• For existing condo projects, 50% must be sold.• For new construction projects, 50% must be closed or under contract.• No more than 15% of the units can be 30 days behind on HOA dues.• No more than 10% of the project can be owned by a single entity.• Cannot be within 1000 feet of a heavily traveled road, 3000 feet of railroad, one mile of airport, or five miles of military airport.• Cannot be in designated wetland or flood zone.• HOA cannot be in control of builder.• This list is not all inclusive.
  8. 8. FHA Approved Condo Search• https://entp.hud.gov/idapp/html/condlook.cfm• Google “FHA approved condos”.• Input State and Zip Code field.• Listing Agent should also know if the Condo is FHA approved.• FHA charges $1500.00 to approve a condo project, which is a hard cost to the Borrower if not currently approved.
  9. 9. FHA Condo Lending Guidelines• 580 credit score minimum, must meet exact FHA underwriting guidelines.• 640+ credit score uses DU/AUS results.• At least 3.5% down payment required.• Total debt ratio no greater that 45%, 56.99% if compensating factors and over 640 credit score.• Factors include 3 months PITI reserves, higher credit score, verifiable rent for 12-24 months, 10% down etc.• HOA condo questionnaire to determine eligibility hasn’t changed. $200 - $400 hard cost to Buyer.• Approve/Eligible DU/AUS findings.
  10. 10. Non-Warrantable Condos Break Down Into Two Categories• Credit score above 620. • Credit score below 620.
  11. 11. Good Credit Non-Warrantable Condo• 30% minimum down payment 620-679 credit score• 20% minimum down payment 680+ credit score.• Minimum purchase price of $100k.• Available on 5/1 and 7/1 arms near conforming rates.• Maximum debt ratio of 45%• Condo-Tel minimum down payment = 30%.• LTV guidelines apply to Primary, Second home, and Investment properties• Turn time 6-8 weeks for approval.
  12. 12. Bad Credit Non-Warrantable Condo• Private investor loan through our network.• 35-40% down payment required.• Interest rates typically double digit, 10% - 15%• Terms of 3 year and 5 year balloons.• Individual investor will have their specific terms.• Higher loans costs. Average 3% in origination, have seen as high as 7%. Investor specific.• Minimum loan amount of $50k.• Turn time typically 2 -3 weeks.
  13. 13. Profitable Opportunity• Florida had a very high condo concentration.• Condos present unique lending challenges that can be overcome through accurately qualifying the Buyer.• Overall average sales price is higher, leading to increased commissions.

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