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Condo-Tel Financing

Condo-Tel financing can be challenging. Condo-Tel units are a relatively new investment property vehicle being offered in vacation and resort areas. Condo-Tel units are typically set up as a condo with a lobby area containing a rental desk. Condo-Tel units frequently do not have kitchens. Owners may use the property when they wish and make their Condo-Tel unit available for weekly rental through a Condo-Tel rental pool. A Condo-Tel may be a viable alternative to the more traditional approach of buying a condo at the beach as a second home and then placing the unit into a rental program run by a property management company. In many areas of the country, these management fees can run from 25 to 30% of your rental income. Some of the Condo-Tel units I have looked at appear to offer a less expensive alternative to the management fees but, as always, you need to do your due diligence to be sure. From a financing perspective, a Condo-Tel will require a larger down payment than a more traditional condominium. Condos used as second or vacation homes can generally be financed with a 10% down payment and mortgage insurance can be avoided with a combination condo-tel financing strategy. Although at slightly higher rates, I do have several lenders who will make available 95% financing. Please email with any questions about condo-tel financing.

Unfortunately, many mortgage lenders have not yet caught on to this rapidly growing segment of the market. As a mortgage broker, I have access to nearly 700 lenders and some fairly sophisticated lender search tools. Of the 700 lenders, only 14 returned any loan programs which allow Condo-Tel financing. Most require fully documented income with 25-30% down payments with no secondary financing permitted. However, one of my favorite lenders will permit up to 80% financing on a full doc loan and up to 75% financing on a stated income mortgage loan or No Ratio mortgage. This lender will permit interest only mortgage condo-tel financing which may significantly reduce your monthly costs. 

Common guidelines include:

Minimum loan amount is $200,000.
Participation in a rental pool must be voluntary.
Income from second home rentals used for qualifying purposes will be considered on a case by case basis if a 2 year history is available.
Commercial space is limited to a maximum of 20% of the project.
New Condo-tel projects or conversions must meet a pre-sal requirement of 70% sold and or/closed. 60% must be either owner occupied or second homes.
HOA may still be under the control of the builder/developer.
There is no height restriction or number of units restriction.
Projects with Timeshare units are not eligible.

Max Loan Amount                 Full Doc                                     Stated Income/No Ratio

$500,000                                80%                                            75%
$650,000                                75%                                            70%
$1,000,000                             70%                                            65%

If you are looking at these and would like to explore some options, please give me a call or send me an email with as much detail as possible

Read more about Condo-Tel Financing Closing Costs

Were you looking for condo financing?

I have an article "Buying your home in 2008" by email explaining negotiating strategy in today's market.

Prequalify for your Condo-Tel Financing.