How to get Owner Occupant Financing for an "Unwarrantable" Condo

Question

Hi All,

I've been looking to make my first purchase for a few months now.  I finally found a seller who is willing to give me an excellent deal on an off-market condo.  I would be purchasing this condo for about 65K, which is about 10K below market value.

The seller and I are ready to move forward, however I cannot get a conventional mortgage due to this condo being unwarrantable.  It is not unwarrantable due to a dysfunctional HOA or any red flags within the community.  the only reason it is unwarrantable is because of the fact that due to the recent Fair Housing Act Laws, 51% of the community is supposed to be owner occupant.  Because it is only about 5% owner occupant, ZERO conventional lenders will give me a conventional owner-occupant loan for the property.  Seems like the most counter-intuitive rule ever IMO.

Anyways,  I've been doing my research.  I contacted a bank that offers commercial loan products.  I can't even get a loan from them because they expect 20%-25% down which would clean out my savings.  Furthermore, even if I had enough cash to get this type of loan, I wouldn't even be allowed to live there, as this would be a "commercial loan" for investment properties only!

Finally, I contacted the NC State Employee's credit Union to inquire about if they do financing for "unwarrantable" properties.  I had to call twice, as I got two people on the phone line who couldn't even comprehend what I was explaining to them (Yeah, my situation is kind of complex, but come on).  Eventually i got the answer that no, they will not finance any unwarrantable properties... I'm not sure if I believe this person or not as they appeared to have no clue how to initially answer my question.

Anyways, I'm in dire need of Ideas of how I could get low down payment owner occupant financing on this unwarrantable property.  I've ran the numbers and it's a good deal, the seller is more than willing to work with me, and I'm excited to purchase my first home.  Are there any lenders that can help me?

FYI, this property is in Raleigh NC

Keith N. · Answer

@Dawn Brenengen haha woops.  yeah, that's what I meant!

Chris Martin · Answer

@Keith Nelson

My view is that this is not a good deal. $10K (about ~15% )below retail market? On a product you can't realistically resell? Buy it only if you plan to live there for a very long time -or- absolutely don't need to sell for a generation.

Have the seller provide financing via a subject-to loan may be an option... although this is still not very attractive, IMO.

95% NOO, 5% OO... those are red flags. Unless you have a substantial number of block owners with majority control, who have a record of managing the place with fiscal integrity... I would say this acquisition is a mistake. I would also guess you'd see 75%+ non-market transactions in the recent past. (Disqualifying Flags 'T', 'P', 'I', etc.) If you PM me, I will look for you but I'm not going to post anything, just email/PM to you...

Dawn Brenengen · Answer

@Keith Nelson Is that the same as Coastal Federal Credit Union? I think that's why I couldn't figure it out  :)

Keith N. · Answer

@Dawn Brenengen Federal Coastal Credit Union. not a dumb question

Dawn Brenengen · Answer

@Keith Nelson I feel like this is a dumb question - what does FCCU stand for?

Keith N. · Answer

Hey @Dawn Brenengen,

Yes, since this post I've talked to both FCCU, SECU, and Summit and they can all finance unwarrantable condo's.  They just ask for a boatload of info about the HOA.  I decided to move on and look at other properties, however during this process I figured out that Credit Unions have the most attractive loan terms I've seen.

FYI, FCCU and Summit offer 30 year fixed loans at ~ 3.75%, and the PMI they charge is much less than a regular mortgage lender.  SECU has good rates, bot no 30 year fixed option.  I will probably use FCCU when I do purchase something.

If you know the names of people at either FCCU or Summit that could help me though, it would be extremely helpful. While these credit unions have the best rates, the people I've been in contact with have been slow to respond and lacking detailed knowledge.

Dawn Brenengen · Answer

@Keith Nelson SECU WILL finance one of these condos.  You can only have one of these kinds of loans with them, and you have to be a SECU member.  Are you?  If so, I can give you the name of someone there who can help.

Ashley Pimsner · Answer

@keith nelson I feel your pain as I have been in your shoes.

Try this link and have condo management company fill out questionnaire and submit.

Also contact them and explain your situation about purchasing an owner occupied non warrantable condp and please report your success or lack there of as I have not personally used this resource.

www.nonwarrantablecondoloans.net/

Good luck!

Ashley

How to get Owner Occupant Financing for an "Unwarrantable" Condo

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