Purchasing a condo requires a clear understanding of the unique loan options designed for specific types of condo properties. Whether you're buying a high-rise unit, a non-warrantable condo, or a condotel, each type comes with distinct requirements and considerations. This guide explores the key details to help you make informed decisions.
High-Rise Condos
Towering Residences: Understanding High-Rise Condo Financing
High-rise condos are residential units in buildings with more than 16 floors, often located in urban centers. These properties offer unique advantages and challenges for buyers and lenders alike.
Advantages and Drawbacks
- Advantages: Panoramic views, premium facilities, and prime locations
- Drawbacks: Longer elevator wait times during peak hours and potential safety concerns in emergencies.
Notable High-Rise Developments
- Four Seasons Residences, Chicago: 66-story tower priced from $2M–$10M with Lake Michigan views and upscale amenities.
- Trump Tower, New York City: 58-story building in Midtown Manhattan with units starting at $3M offering views of Central Park and Hudson River.
Loan Options for High-Rise Condos
These loans often allow loan-to-value (LTV) ratios up to 90 but may involve additional conditions depending on the HOA's financials, questionnaire and building size.
Prime Locations for High-Rises
- San Francisco: South Beach neighborhood offers exceptional views.
- South Florida: Fort Lauderdale Beach, Miami's South Beach and Brickell.
- Dallas: The Harwood and Arts Districts feature stunning towers.
- Los Angeles: Century City, Hollywood, and downtown Financial District
- San Diego: Downtown areas like Bankers Hill and Little Italy
Luxury Condos
Opulent Living: Financing High-End Condo Properties
Luxury condos represent the pinnacle of upscale urban living offering premium locations, designs, and amenities. These properties cater to discerning buyers seeking comfort and sophistication.
Hallmarks of Luxury Condos
- Prime locations in major cities and coastal areas
- High-quality finishes and spacious floor plans
- Custom designs and top-of-the-line appliances
- Exclusive building amenities (private pools, spas, concierge services)
Investment Potential?
Luxury condos can be lucrative investments due to their potential for appreciation in desirable locations. The limited supply of high-end properties in prime areas often leads to steady value growth over time.
Notable Luxury Condos
- One57 in New York City: One of the tallest residential buildings in New York with units starting at $5 million and penthouses exceeding $50M.
- Ritz-Carlton Residences, Miami: Units priced between $3M–$15M featuring premium finishes and beachfront access.
Luxury Condo Hotspots
- Miami Beach: South of Fifth neighborhood
- San Francisco: Modern Designs with Ocean views
- Downtown Chicago: Magnificent Mile buildings with lake views
- Beverly Hills, Los Angeles: Condos with private spas and concierge services.
Financing Options for Luxury Condos
Lenders may require additional documentation for luxury condo loans when verifying income with the following options:
- 1-2 years of tax returns
- 12-24 months of bank statements
- 1099 statements for self-employed contractors
- Profit & Loss statements
- Liquid asset statements
Non-Warrantable Condos
What are Non-Warrantable Condos? They are condos that don’t meet the underwriting guidelines of Fannie Mae or Freddie Mac.
Characteristics of Non-Warrantable Condos:
- – High percentage of rental units
- – Mixed residential and commercial use up to 25-percent of building.
- – Ongoing litigation involving the HOA
Financing a Non-Warrantable Condo
Securing financing often requires specialized lenders or non-conforming loans typically with minimum down payments of twenty-percent and stricter terms.
Locations with Non-Warrantable Condos
- Watermark Tower, San Francisco: Mixed-use residential development with units priced $1.5M–$5M
- Oceanfront Condos, Honolulu: Vacation rentals priced from $500K up to $3M
- South Beach, Miami: along with Brickell have various categories of condos.
Condotels
What is a Condotel?
A condotel combines condo ownership with hotel-like amenities. Owners can rent their units through hotel management programs. They offer both lifestyle and investment opportunities in nearby popular tourist destinations and require specialized financing.
Financing Condotels
Lenders often classify condotels as investment properties requiring higher down payments (25-30 percent) and higher interest rates than a regular/basic condo.
Notable Condotel Developments
Marriott Vacation Club (Orlando, FL): Located near Disney World. Prices for these units range from $150,000 to $500,000 depending on the unit size and location.
W Fort Lauderdale (Fort Lauderdale, FL): Offers oceanfront views and modern amenities including room service and concierge. Condos here can cost anywhere from $400,000 to over $1 million depending on the floor and unit features.
Emerald Grande in Harborwalk Village in Destin, FL: This luxury condotel development is considered one of the most luxurious and full-service condos on the Emerald Coast with stunning views of the gulf and nearby. Prices range from $750,000 to $4 million depending on the size and location.
Where to Find Condotels
- Fort Lauderdale, FL: Beachfront areas of Ft. Lauderdale.
- Aspen, CO: Ski resort condos in Aspen, Vail, and Beaver Creek
Comparison of Non-Warrantable Condos & Condotels
| Factor |
Non-Warrantable Condo |
Condo-tel |
| Investor Ownership |
More than 50% units owned by investors |
More than 50% units owned by investors |
| Commercial Space |
Over 25% of complex dedicated to commercial use |
May have over 25% of complex dedicated to commercial use |
| Litigation Status |
Active legal proceedings against HOA |
Not allowed |
| Reserve Funds |
Insufficient financial reserves for maintenance |
Not allowed |
| Prof'l Mgmt & 24-hour Concierge |
No |
Yes |
| HOA Rental Policy |
3-12 month minimum |
Allows daily, weekly, or monthly |
| Building Amenities |
Maybe |
Like a Luxury Hotel |
| Down Payment |
20-percent |
25-30 percent |
General Condo Loan Requirements
Key Criteria
- Credit Scores: Minimum of 660 for competitive rates
- Down Payment: Typically 10–25% depending on lender and type of condo.
- HOA Approval: Lenders require a completed HOA questionnaire
Income Verification Options
- Tax Returns: 1-2 years of 1040s or if you're self-employed personal and business tax returns
- Bank Statements 12–24 months for self-employed borrowers
- Income Statements 1099s or P&L statements from a CPA
- Liquid Assets Account statements for retirees or investors, or high-net worth individuals
Tips for Condo Loan Approval
- Loan-to-Value (LTV) Rati Most lenders have an LTV limit of 80% or lower for non-warrantable and condotel properties. Try for 80 LTV maximum (20% down)
- Condo Association Health: Make sure the HOA is financially stable with sufficient reserves
- Unit Occupancy: Owner-occupied condos often qualify for better financing terms.
Ready to Explore Your Condo Loan Options?
Getting a condo loan doesn’t have to be complicated. With the right guidance and a clear understanding of your options, you can secure the ideal loan for your dream property. Start your journey today!
Work with us so you have abundant choices from our access to over 75 different lenders with condo loan programs.
Still have questions
What reasons will a lender not lend on a Non-warrantable Condo?+
If any of the project's buildings or units have structural damage or if the HOA is in pending litigation.
What reasons will a lender not lend on a Condotel?+
One reason is the HOA doesn't have sufficinet reserves. Others are some units are owned as timeshares, the unit cannot be rented during certain days of the year by the owner, and less than 500 square feet, lacks a dedicated kitchen area or separate bedroom.
What reasons will a lender not lend on a FHA or Fannie-mae approved condo?+
When the unit falls into the category of being non-warrantable which includes one person or entity owning more than ten percent of the units, the builder/developer hasn't transferred ownership, or the majority of units are non-owner occupied. The condo project is likely on the denial list.
