Let's Get Small Condo Projects

Mortgage and Lending with Guaranteed Rate, Marin County, CA NMLS: 22343

Let's Get Small Condo Projects


San Francisco is known for its majestic Victorian and Edwardian homes, and residents and homebuyers in the city know that sometimes these massive dwellings get converted into condominiums.  Not one's traditional idea of a condo project, what was once a majestic single family home is metamorphosed into a multi-level condominium project with three separate living units, for example.  But small condo projects, typically defined as two to four units, can also be other than a colorful structure in the City by the Bay.  In fact, we encounter them throughout California.  


Financing a condominium unit in a small project can be a challenge in some cases, especially where a jumbo mortgage is required.  Lenders always review the attributes of a condo project when they finance one, and their methods for doing so take into consideration the fact that with a smaller number of units, the typical ratios they use to assess risk can get out of whack quickly.  For example, if a condo project has 10 units and one of them is rented out, the project has a 10% "off site address" ratio.  But put one rental unit in a two unit complex and now you have a non-owner occupancy ratio of 50%.  Big difference.


Fannie Mae and Freddie Mac, the government sponsored entities that set the foundational rules for much of residential lending, specifically "carve out" small projects and treat them different in some ways that are sensible and helpful.  But when we get into jumbo territory --- that is, loan amounts above the conforming loan limits --- each investor could potentially have its own set of rules and risk tolerances.  If you are looking to get a mortgage on a unit in a small project and you encounter challenges, know that we will address these not-so-uncommon scenarios that have up till now proved extremely difficult:


  • Percentage of rental units.  We will now permit 100% of a small complex to be non-owner occupied.
  • Single owner concentration.  We'll allow one individual to own all of the units in a small complex.
  • Pre-sale requirements.  We're OK being the first lender to close a transaction in a new construction or condo conversion (from a TIC, for example).
  • Lender concentration.  We'll finance all of the units in a small project.
  • No master insurance policy?  So long as permitted by the CC&Rs, we'll allow individual owners to obtain their own hazard insurance policies.


Small condo projects can afford a unique combination of traits to the owner or buyer.  Often, the purchase price is lower than that of a single family dwelling in the same area but because of low number of units in the project, there isn't a "condo feel" to living there.  It can be a best of both worlds situation.  And even though small projects have traditionally presented some stumbling blocks with respect to financing, today's California buyer who needs a great jumbo loan has a pathway to terms consistent with traditional condo projects and single family residences.  And if you don't believe a word I'm saying, well then....





Robert J. Spinosa
Vice President of Mortgage Lending

Guaranteed Rate
NMLS: 22343 
Cell/Text: 415-367-5959 Fax: 415-366-1590

Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960

Berkeley Office:  1400 Shattuck Ave., Suite 1, Berkeley, CA  94709

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate's Human Resources Department.


Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood ChicagoIL 60613 - (866) 934-7283


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Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

Anyone considering purchasing in condo needs to give you a call, Rob. There are so many things to consider - large, or small complex. Understanding financing options is critical before going out to tour the available inventory. D 

Nov 01, 2018 08:37 AM #1
Lee Potts
Aloha Group Maui - Lahaina, HI
The smarter we work, the luckier you get.

"Oh I can come in here for $4, ok"

Nov 01, 2018 01:38 PM #2
Susan Haughton
Long and Foster REALTORS (703) 470-4545 - Alexandria, VA
Susan & Mindy Team...Honesty. Integrity. Results.

Very helpful info for buyers looking to purchase in a small condo community.   I can see how they would have a lot of appeal.  You are obviously the lender to overcome any challenges presented by these small communities.

Nov 01, 2018 06:28 PM #3
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

I had no idea you can do the type of loan you mention, Rob. Great info for me know. Thanks.

Nov 24, 2018 04:20 AM #4
Mike Cooper, Broker VA,WV, MD
Cornerstone Business Group Inc - Winchester, VA
Your Neighborhood Real Estate Sales Pro

Great info, Rob. I did have a condo purchase torpedoed a few years ago because the investor/owner ratio was off. 

Nov 24, 2018 12:13 PM #5
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Hi Rob

Thanks for some great education on financing small condo projects. The owner-occupancy issue often rears it's head in certain communities here.


Nov 25, 2018 11:54 AM #6
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Rob Spinosa

SVP of Mortgage Lending, Marin County
Can I Get a Jumbo Loan with 10% Down?

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