🏨 Condotel Loans | Mortgage Rates LIVE

Invest where vacation meets opportunity! We’ll review today’s Daily Mortgage Rates and dive into Condotel Loans, designed for financing hotel-condo style properties.

We’ll discuss financing options, eligibility, and investment considerations for buyers exploring condotels as a revenue-generating property.

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The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as thousands of Non-QM mortgage loan program variations using alternative income documentation! 

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!

Our team of licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access thousands of mortgage programs using Alternative Income Documentation such as Bank Statement Mortgages...

Transcript

Today, we will be talking about condos. So, we love non-QM loans here at The Mortgage Calculator, and we have a ton of different options. One unique option we can offer is a loan on a condo, typically not eligible under standard guidelines for any of the standard programs. So, we’re going over that today.

Again, if you'd like a full breakdown, an itemized loan estimate on any of our loan programs, please drop a comment or reach out to one of our team members. They’d be happy to help you out. Let me go ahead and share my screen, and we’ll check out the live rates for today.

When we’re talking about rates in general, this is the last five days for the ten-year Treasury. The ten-year generally tracks with rates overall, especially when we’re talking about the different program options. So, we typically want to take a look at the direction this is trending, and that’s been a little bit upwards. Momentum is upwards with some of the news, but we always want to take that into perspective and see that we’re still at one-year-plus lows.

Rates don’t always react instantly to the ten-year Treasury, but it is a general indicator when we’re talking about all kinds of different loan programs.

Now let’s get into the specifics. We have our live rates here for all of our standard programs. This allows us to compare all the different programs. There are dozens of options here.

What we do is set a $500,000 purchase and a $300,000 loan amount. That corresponds to 60% loan-to-value. We use a 760 FICO credit score and 40% debt-to-income. This allows us to see all the different options across all programs.

First up here is our conventional option for a primary home, a 30-year fixed, which is your standard mortgage loan. Coming in today, rates as low as 5.875%, generally lower than they’ve been for the last few years, which is amazing.

With all the fees included, the APR is 6.111%. Remember, we always want to use APR to compare across programs, as that standardizes all of the different fees that may be included.

If a borrower doesn’t qualify for conventional, we typically want to explore FHA, which allows a little more leniency on credit issues and higher ratios, but does have additional fees for upfront insurance that is required. FHA comes in today at 5.25%. We’re hoping to see that drop into the fours. It hasn’t yet. Final APR is 6.13%, a touch higher than conventional once you add those extra fees.

For eligible vets and active VA borrowers, VA is typically the best option. Rates as low as 5.375%. You can see the final APR is 5.627%, with much lower fees overall for our veterans using VA loans.

Our final standard option is USDA. For properties in USDA-eligible areas, typically rural areas of the country, these can be great options if the borrower meets income limits and the property is eligible. Coming in pretty low today at 5.125%, with a final APR of 5.779%.

We typically compare USDA to other options for borrowers looking in those areas.

Now we’ll get into our unique options. We love our non-QM options here at The Mortgage Calculator, beyond the standard programs. First up are our alt-doc options for a primary home. Typically, self-employed borrowers need these options when tax returns don’t show enough income. We can use alternative documentation such as bank statements and 1099s, etc.

We’re seeing a 5.875% rate, with a final APR of 6.145%. Non-QM is almost identical to conventional today, as rates don’t move minute-by-minute like conventional. Our non-QM alt-doc options can also be used for investment properties.

The next option here shows rates as low as 6.321%. We compare that to conventional investment options, coming in at 6%, with a final APR of 6.311%, just a touch cheaper.

The final option we’ll go over today is DSCR. That stands for Debt Service Coverage Ratio. No income or employment is needed. We simply use the estimated rents to determine the DSCR ratio. If the property cash flows and rents exceed expenses at a ratio of one or higher, which is what we set for all these scenarios, it qualifies.

This first option includes a three-year prepayment penalty, common for these commercial-style loan options. With that prepayment penalty, rates are 5.999%, which is pretty amazing. Final APR is 6.222%, beating conventional and alt-doc options.

We can add a five-year prepay to lower it even more, with a 5.875% rate and a final APR of 6.181%. There is also a no-prepayment-penalty option, coming in at 6%, with a final APR of 6.321%.

Those are our options today. There are other variations and loan types, but today’s topic is how a customer can purchase a condo-hotel.

I wanted to pull up an actual local property, and I found this amazing one at the Four Seasons. This is a Four Seasons private residence. Some units operate as a hotel, and others are owned by private owners but participate in the hotel program. That’s a condo-hotel.

There are a few reasons I chose this property. Since we’re using a non-QM loan program, there’s no strict max loan limit like conventional. However, there are caveats. One is size. There’s typically a minimum square footage requirement, usually around 500 square feet. This unit is 775 square feet, which qualifies.

Another requirement is a separate bedroom, which this unit has. Studios are ineligible. We also must have a full kitchen, including a stove and oven. Some older or smaller units don’t meet this requirement, so it’s important to be careful. This property checks all the boxes.

If a customer wants to purchase this as a primary residence, it is allowed. A unique option, living in a hotel with access to all the amenities. For a primary purchase, we can do 15% down. Rates start as low as 7% with 2.125 discount points. There’s also a 7.875% option that provides a lender credit of $9,050 toward closing costs.

This example uses full documentation, primary occupancy, a 760 FICO score, and 15% down, or $225,000.

A more common scenario is purchasing a condo-hotel as an investment. In this example, we used investment occupancy, full documentation, and a 25% down payment. The max loan amount is $1,500,000, which we did not exceed. This property qualifies because it’s in a resort area and affiliated with a national hotel chain.

Rates are slightly lower due to the higher down payment. A 6.999% rate costs 3.5 discount points, while a 7.99% rate costs 1.875 points.

The most common request we see is DSCR for investment purchases. No income or employment is needed. We added a five-year prepayment penalty, which improves pricing. The key requirement is meeting the DSCR ratio. Short-term rental income can be used, but documentation is required.

With the prepay, the lowest rate is 6.375% at 2.975 discount points. A 7.25% rate offers a 1.15 lender credit toward closing costs.

These are amazing options, especially with the growth of short-term rentals in areas like Miami and Fort Lauderdale. Many newer condos are designed to allow short-term rentals, placing them into the condo-hotel category.

Next episode, we’ll cover non-warrantable condos, which are very common, especially in Florida. These are condos that don’t meet one or more Fannie Mae requirements.

Today, we focused on condo-hotels that are part of a hotel program. We’ll cover non-warrantable condos next time.

I don’t see any questions at the moment. If you have any, feel free to visit our website or reach out to one of our loan officers. They’d be happy to help you out.

We’ll see you later this week with another episode of Daily Rates Live.

Thanks, everybody.