HELOC on non-warrantable condo

Investor · Indianapolis, IN · Member since 2014 · 208 posts · 137 votes

I'm considering purchasing a condo that is non-warrantable (not eligible for conventional financing) because one owner owns too many units and there is a pending lawsuit against the HOA. My idea is to purchase it in cash and then, instead of doing a cash-out refi, open a HELOC. I have been told that banks don't look into condo documents when opening HELOCs and won't know or care about the obstacles to conventional financing. Has anybody done this/know if this is true?

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Stacy RaskinBusiness Member
Lender · Member since 2022 · 1k+ posts · 530 votes
2y
Would this be an investment property or an owner occupy property? If an investment property, there non-warrantable DSCR loan options.
Some details:
- Loans available for purchase, rate and term refinance (no cash out) and cash-out refinance
- Credits score down to 620
- LTV are up to 75% for purchase and 70% for cash out.
- Rate buydown feature available.
- DSCR (lower of gross rent lease or Form 1007/216 rent divided by PITIA) as low as 1.0x.
- For experienced investors (one year of investor experience and own home), short term rentals can be structured off of 12 month short term rental history with 20% expense factor. If a purchase, AirDNA projected rents for the property address with 20% expense factor. Other loan programs don't have home ownership requirement.
[email protected]818-770-0340
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Mike D.
OP
Investor · Indianapolis, IN · Member since 2014 · 208 posts · 137 votes
2y
It would be a residence, and most brokers won't be able to fund it with a DSCR either due to the litigation issue. I've tried that route which is what brought me around to the HELOC.
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Stacy RaskinBusiness Member
Lender · Member since 2022 · 1k+ posts · 530 votes
2y
Quote from @Mike D.:

It would be a residence, and most brokers won't be able to fund it with a DSCR either due to the litigation issue. I've tried that route which is what brought me around to the HELOC.

What state is the property you're looking to buy in? There are lenders who will do the loan if no health or safety issues even with litigation (depending on the details).
[email protected]818-770-0340
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Jacob Sherman
12 Penns Trail Suite 138 Newtown, PA 18940 · Member since 2023 · 1k+ posts · 319 votes
2y
You can absolutely get a 30 year fixed loan for a non warrantable condo via non qm lending . What is the full scenario looking like ?
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Andrew Zamboroski
Lender · Member since 2021 · 500 posts · 131 votes
2y
Quote from @Mike D.:

It would be a residence, and most brokers won't be able to fund it with a DSCR either due to the litigation issue. I've tried that route which is what brought me around to the HELOC.
We have gotten some wild ones approved. Do you already have a condo questionnaire completed?
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @Mike D.:

I'm considering purchasing a condo that is non-warrantable (not eligible for conventional financing) because one owner owns too many units and there is a pending lawsuit against the HOA. My idea is to purchase it in cash and then, instead of doing a cash-out refi, open a HELOC. I have been told that banks don't look into condo documents when opening HELOCs and won't know or care about the obstacles to conventional financing. Has anybody done this/know if this is true?

I am curious why you would want to buy a condo that is non warrantable and dealing with HOA lawsuit? What is your exit strategy?
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