A recent guideline expansion makes it easier for your clients to get into new construction condo complexes. Read on for details!
There are lots of reasons for home buyers to love condos. Much of the maintenance responsibilities will be handled, and they often offer access to shared amenities that would be cost prohibitive if the homeowner were to put them in on their own.
As a real estate agent, however, you may be aware that the condo financing process has unique qualifying hurdles that have nothing to do with a client’s personal finances or credit score. Condo complexes must meet certain guidelines aimed squarely at how the project is managed. If they don’t meet these guidelines, they won’t qualify for financing via Fannie Mae, Freddie Mac, FHA and VA. And at Quicken Loans, we understand that nothing is more frustrating than a deal falling through because the condo complex doesn’t meet these condo-specific guidelines – something that’s very much out of the control of the client.
In defiance of these condo closing issues, Quicken Loans is proud to present a new exclusive offering to deal with these hurdles.1 We’re removing some of the biggest challenges your clients face around the approval process for a new construction condo. In turn, this will make it exponentially easier for your clients to get to the closing table. This post will cover the more flexible guidelines offered (especially compared to other lenders’ guidelines) and the massive purchasing power it affords your clients.
More Financing Flexibility
In order to finance new construction condominiums, most lenders and banks require that the following guidelines are met:
- 50% of the units in the phase must be sold to owner-occupied purchasers.
- The entire condo phase must be complete.
With this option, clients will be able to close when the following guidelines are met:
- 25% of the units in the phase are under contract to sell to owner-occupied purchasers.
- Only the client’s subject building must be complete rather than the entire legal phase.
Greater Range of Loan Products Available
Not only are there more flexible guidelines in place, but these loans are eligible for conventional financing as well. This means a few things:
- Your clients won’t pay a higher interest rate in order to get into a new construction condo.
- Fixed-rate options available include, among others, the popular 30-year fixed mortgage with a down payment as low as 3%.
In stark contrast, most banks only offer some form of adjustable rate mortgage to finance these transactions or demand higher interest rates.
What Else Should You Know?
In order to qualify for this loan option, a minimum FICO® score of 700 is required. Additionally, while the guidelines mentioned in this post are opened up significantly, everything else about this program will proceed as a standard condo transaction would. That means the following condo project documents are required to determine compliance with conventional guidelines:
- The master insurance policy
- The condo budget
- The condo project’s master deed
- A condo questionnaire
If you have clients who might be interested in knowing about this option or know a condo developer, there are several ways to get more information to share with them.
If you have an account through our Agent Relations portal, feel free to reach out to your dedicated relationship manager. You can also give us a call at (888) 980-2891 or visit our Agent Relations page for more info.
1 The New Construction Condo program is available on eligible refinance or purchase conventional and jumbo loans on primary, secondary and investment properties. Must have a minimum of 25% for conventional and 50% for jumbo of presold units by builder of legal phase (development of a single property divided into separate units), any prior phases and must pass additional condo project review requirements. The subject building that the unit is in must be complete as evidence by a certificate of occupancy. Must meet minimum FICO and loan-to-value ratio (LTV) requirements. Not available in Florida. This is not a commitment to lend. Additional restrictions and conditions may apply. Not all condo projects are included. Please contact a Home Loan Expert for additional information.