🏢Non-Warrantable Condo Loans | Mortgage Rates LIVE

Unlock financing for the condos others can’t! We’ll go LIVE with today’s Daily Mortgage Rates and cover Non-Warrantable Condos, including what they are and how financing differs from standard condos.

We’ll break down eligibility, underwriting considerations, and tips for buyers and investors navigating non-warrantable condo financing.

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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're going to be talking about non warrantable condos. So definitely a hot topic here, in Florida where I'm from, and, definitely a great option for us to showcase our non QM options with the mortgage calculator. We love to offer solutions, for loan scenarios that are a little bit outside the box. So let me go ahead and, switch my screen up, and we'll get started for today.

So a lot of news, in general, in the markets, you know, the rates are going up and down overall. What we wanna look at here today, and what we do every day is, look at the ten year treasury yield. That's typically the best indicator of rates overall as a whole, especially when we're talking about different loan programs. And here you see, over the last five days, a lot of up, a little bit of down. But in general, if you take it into perspective here, we are still at, one year lows and, in some cases, multiyear lows pretty much across the board.

So even though there's a lot of news every day, definitely take, the big picture into perspective here. And for any of our borrowers out there looking to, get a home, it's definitely still a great time. And now let's get into our actual live rates for this morning. So I just refreshed this a few minutes ago here. We always compare a standard single family home, 500,000 purchase, 300,000 loan amount, corresponds to 60% loan to value, seven sixty credit score.

That's what we use for the demos here, and 40% debt to income ratio. That's what we sent. That way we can compare all the programs across the board. Identical. First up here, our conventional option for a primary home, what most people think of when they think of a mortgage loan.

Rates today come in as low as 5.875. Finally, PR 6.111, pretty much the same as yesterday. FHA coming in today at 5.125 rate, but you always wanna look at the APR. FHA does allow a little more leniency on, DTI and credit issues, but has upfront and yearly mortgage insurance, which drives up the APR a little bit. So the overall APR, a touch lower than conventional today, which is pretty amazing.

Usually, it's a touch higher, and it's at, 6.04 there. And next up are VA loans for our eligible vets and active service members. These programs are amazing. Typically, the best option. Rates as low as 5.375 today.

And finally, PR 5.615. Much lower fees overall for VA. So even though the rate looks higher, you always wanna compare the APR, a much lower APR overall compared to FHA for our VA borrowers. And USDA, on the next standard option here, coming in today as low as 5% of our properties in VA or, USDA eligible areas, the rural areas of the country. And if our property is eligible and our borrower is eligible, pretty amazing options as well as 5% rate.

Finally, PR comes in 5.698. So if our customer is comparing that to, FHA and conventional, USDA is actually, pretty amazing today. And where we love to shine here in our topic for today, of course, are non QM options. So these are options outside of, the norm here, outside of conventional FHA, VA, USDA. These programs, allow us first off to use alternative docs, such as bank statements, ten ninety nines, etcetera, and also allow us to lend on alternative properties, otherwise known as a nonmarketable condo, our topic for today.

Definitely one of our non QM options here. So our first option here, to use our alternative docs for a primary home, rates of those 5.875, the same as conventional. Finally, PR is 6.145, just a touch higher with the fees there, a little more fees and cost included on the non QM options. And we can use our alt doc options for an investment property coming in today at 6% rate. Finally, PR 6.321, pretty much same as yesterday.

And conventional for an investment, 6% rate. APR comes in 6.311, same as yesterday as well. And one of our favorite loan options, DSCR, stands for debt service coverage ratio. No income. No employment documentation needed.

We simply use the estimated rents to determine a DSCR ratio. The estimated rents can cover the estimated expenses, AKA the property will cash flow. That's a ratio of one or higher. This is what we set for the demos here. This option has a three year prepayment penalty, which is pretty standard for DSCR coming in today at 5.999.

Finally, PR 6.222, beating all dog and conventional. Pretty amazing. And our five year prepayment penalty can be added to that option to sweeten the deal a little bit. 5.875 rate. Final APR 6.181.

And for our investors that don't want a PPP or, our states that don't allow it, rates come in at 6% flat. Finally, PR 6.321. And we have a ton of other options, second mortgages, commercial, fix and flip, construction, rehab. Tons of options here, but let's get into our topic for today. It's just going to be nonwarrantable condos.

So I picked out, just a random condo. I'm not saying this is not warrantable, but, typically, options like this are not. Typically, you'll find the older buildings that may not have kept up with, reserves. And, at this price point, not a lot of the owners are probably financing, these properties in this case. So I didn't do a deep dive.

I don't have the actual documentation from this condo. But this is typically what we look at when we see that it would not be financeable under Fannie Mae, Freddie Mac, conventional, FHA, VA, USDA, etcetera. So, here are some of the items that make a property or a condo non warrantable. So first off, ownership issues. So a lot of times, this happens, if there's one investor or sometimes the developer actually keeps a lot of units as, actually renting out a lot of the units.

So the developer might still control the HOA or still control a bunch of unsold units if it's a brand new development or just decided to keep a bunch. So if a single entity owns more than 10% of the total units, that'll typically throw it out. Forward ownership concentration can also cause a condo to be non warrantable. The biggest thing that we see here in Florida is HOA, financial information, budget problems, they need to have reserves. We need to have 10% reserves.

Other issues, litigation, special assessments, things like that. And, of course, here in Florida, everybody knows there's a lot of construction issues. Here we have a forty year certification that is required along with, when they had the the big condo collapse, they actually added some additional requirements, that are impacting, those project approvals. So, definitely a lot of concerns around there. And another thing that is very common, and could be common for this property, insurance deficiency.

So, when this is a small amount of owners, maybe they decide they don't need, coverage that would otherwise, let the property be financeable. So So maybe they're missing one type of coverage or maybe not have a a Fidelity bomb for their HOA board, etcetera. Usage and occupancy. So, short term rentals allowed. So some of these newer buildings, obviously, not this one we're looking at, but the newer buildings are built for Airbnb or VRBO.

So short term rentals, that would obviously not be allowed. Or other hotel like type of features, that would make in a condo hotel, which was our episode the other day. Lawsuits, other things. The list goes on. There's many reasons why a condo, would fail, to be warrantable and would be otherwise financeable under our conventional options.

So let's get into our first option here of how we actually do finance a property such as this. So here we have our nonmarketable condo investment purchase. So most, most commonly, we see these requests to purchase an investment property. And, the lowest down payment will be 20% down, 80% loan to value for that exact home we were looking at in our example here. And I already went over a lot of these, reasons that we're talking about.

And let's see the rates here. So lowest rate option 7.124, costing 3.25 discount points and costs. And we can go up to a 7.499 rate to lower the cost to 2.25 discount points and costs. And again, that's to put, just that 20% down on an otherwise non financeable condo, which is pretty cool. And this is full doc that we set here, and we do use that seven sixty, FICO credit score that we talk about, in the other demos.

Now the other most common request to do, here for a non be to use our DSCR program. So a lot of our investors, don't wanna do full documentation, which is this option. And we do have our option to do our non workable condo using DSCR. This option has a five year prepayment penalty set. We can still do our 20% down for that exact home.

So all the same, limitations that apply if if for any reason we can't fulfill a standard, condo review, that would be non warrantable condo. So there's many reasons this could be. And in this case, some pretty amazing options. We were able to add that prepayment penalty. And so we actually have options down to 6.749 rate for for 3.35 discount points at cost.

And we can book to a 7.34 three seven four rate to get the point nine seven five lowest cost option there. And again, same scenario, 20% down. DSCR, pretty amazing. We see here we added that five year prepayment penalty. Everything else is pretty standard.

Now less common request, but obviously still applicable. We do have some customers that wanna purchase a non warrantable condo for it. So that's our next example here to purchase that same exact condo. And for primary, we're typically gonna look at full documentation, standard docs, and the lowest down is going to be 15% down payment or 85% LTV. And let's check out the options here.

The lowest rate option is 7.124 rate costs 2.125 discount points of cost. And we can go up to a 7.999 rate and even get some lender credits point one two five lender credit there towards our closing cost. So some pretty cool options here. Again, we're putting much less down payment because we were able to switch that to primary occupancy and get 85% loan to value. And, again, we still use that same 760 FICO credit score, and it was for that primary home loan.

So some amazing options here. Again, there are many reasons why a condo would be non warrantable, especially here, in Florida. There are additional requirements, for condos, additional LTV requirements to be conventional and be warrantable. So there this is a very common request. We have tons of different options, tons of different scenarios down to much lower FICO scores, obviously, affects the LTV.

We just wanted to look at the most common options here. So if you'd like a full breakdown, full loan estimate on a nonmarketable condo or any other quote, please get with our team members. They'd be happy to help you out. And, otherwise, we'll see everybody next week on an episode of daily rates live, and good luck out there home shopping this weekend. Thanks, everybody