Scott Storace - Branch Manager, 100 Pacifica Drive Ste. 140, Irvine CA 92618 NMLS #226339 949.973.0141

"From the minute you call me to the minute we close, I have your back. No hassles, no banker’s hours & quick response times." - Scott Storace

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Condominium Financing: Getting Started

Orange County, CA – Condominium financing differs from home loans for other property types. And the differences can make or break your ability to buy one. The borrower requirements are not much different but the project requirements are. Homeowner’s association dues, property ownership mix, insurance, residential:commercial mix and litigation are some of the project variables that can derail your approval.

Condominiums are appealing to first time home buyers and families alike. Generally speaking, they are more affordable and require less maintenance than single-family residences. If you’re seeking condominium financing be sure to let your lender know. It’s important to first identify which loan program suits your needs best. Each loan program has different requirements for condominium home loans. So getting pre-approved for  a conventional, FHA or VA loan does not mean that you’re approved for condominium financing.  It’s just the first step. Once you’re pre-approved as a borrower you’ll need to check the property eligibility.

Condominiums can vary substantially. The financing will change with them too. And that’s the case here in Orange County, CA. There are many warrantable and non-warrantable condominiums. Non-warrantable condominiums are those that can’t be sold to Fannie Mae or Freddie Mac because they do not fall into one of three categories. In order to begin to determine if the condominium development is eligible for financing ask these questions to determine which category it’s in:

Is my condo Established?

  • Project and amenities are 100% Complete
  • Project is not subject to additional phasing or annexation
  • 90% of the Units are sold and closed
  • Control of the homeowners association has been turned over to the unit owners

Is my condo New Construction or Newly Converted Gut Rehabilitiation?

  • Project/Phase and amenities attached substantially complete*
  • Control of home owners association has not been turned over to the unit owners. (Developer still in control)
  • Not 90% sold and closed
  • No units under 400 square feet

Is my condo Newly Converted Non-Gut Rehabilitation?

  • Conversion without renovation of the HVAC and Electronic Components
  • Project/Phase and amenities attached substantially complete*
  • Control of home owners association has not been turned over to the unit owners. (Developer still in control)
  • No units under 400 square feet

*The project, or the subject legal phase, must be “substantially complete.” This means that a certificate of occupancy (or other substantially similar document) has been issued by the applicable governmental agency for the project or subject phase and that all the units in the building in which the unit securing the mortgage is located are complete, subject to the installation of “buyer selection items” such as appliances.

Your lender and your real estate agent can help you determine what type of property you have. Then they’ll need to look into the other specifics:

  1. Occupancy Percentage and Mix
  2. Insurance Requirements
  3. Home Owners Association Specifics
  4. Project Litigation

If you have any questions regarding condominium financing, please contact me.

Scott Storace

 

 

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