Banks Lend on Condo Rental Purchase?

[Robert Guilfoyle]

I listened to Podcast #183 with Sarah Pritchett where she was investing in condos and a question came to mind. Do banks lend to investors for condo purchases as a rental? I live in an area where there are a lot of condos and always wondered if RE investors invested in them. I know one of the issues with condo investing is the HOA fees, but was curious.

Thanks in advance.

[Andrew Postell]

@Robert Guilfoyle the short answer here is yes, banks lend on condos.  The details that you will want to ask your lender about is if the condo is "warrantable".  The condo may not know this term but your lender should be well versed in it.  A warrantable condo means that Fannie Mae and Freddie Mac will lend on it.  Fannie/Freddie govern conventional loans.  And if you can get a conventional loan on a condominium then you are getting the lowest rate possible, best terms, etc.  However, even if it is not a warrantble condo you can still have a mortgage on it but the rate will be higher, or it might be adjustable, or it could balloon or even all 3 of those things!  So when examining a condo make sure you are working with a lender that understands the differences.  You may even need 2 different lenders to satisfy both the warrantable and non-warrantable choices best for a condo.  Hope this helps!