Financing in 94112>Question Details

Inna, Home Buyer in San Francisco County,...

i tried to refinance my condo, but we have 23% of building commercial space, so I got denied because of it. Please advice

Asked by Inna, San Francisco County, CA Wed Aug 24, 2011

0 votes Share Flag Financing in 94112

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Current Fannie Mae and Freddie Mac guidelines consider condominiums which are in HOAs with over 20% commercial space to be ineligible properties. There are a few portfolio lenders which will finance condominiums in HOAs with 23% commercial space. Your rate may be a bit higher then it would be otherwise but there are options available with as little as 20% equity in your home.

Feel free to contact me for more details.
2 votes Thank Flag Link Wed Aug 24, 2011
Gary's answer is a good one. I was also going to recommend First Republic. Gary or I could give you some good contacts there if you want to get in touch. I'd also check with Union Bank, another good local lender.

But an even more immediate option is to ask a Realtor or Title Company to check online tax records inside your building. We can often see what loans are against your neighbors' homes and what banks have done loans in the past. If you see a loan that looks like a refi, check on who did it and contact that lender. Chatting up your neighbors in the building to see if anyone else has pulled off a refi is another good way to do some research. Good luck!
1 vote Thank Flag Link Wed Aug 24, 2011
Hi Inna-

Yes, it's pretty standard for lenders to aloow no more than 20% commercial space as a part of a condo development according to my mortgage broker. How many ;enders have you checked with? It would be a good idea to check with a mortgage broker since they have access to multiple lenders to review your particular situation.


Rich Bennett

Zephyr Real Estate
0 votes Thank Flag Link Wed Aug 24, 2011
We can go up to 40% commercial. High-rise condo is OK. This is a portfolio lender. Loan amount must be over $417,000.

Happy funding, Rudi
Web Reference:
0 votes Thank Flag Link Wed Aug 24, 2011
There are some banks that may be able to get you a one-time waiver if they can find comps to match it, but it (of course) will depend. Let me know if you have questions and I can put you in touch with a couple of referrals.
0 votes Thank Flag Link Wed Aug 24, 2011
It's standard Fannie Mae & Freddie Mac guidelines to require no more than 20% commercial space in a condominium project - those are the interest rates/terms that are advertised all over radio, TV, etc. since they are the most attractive/most coveted. Your condominium is considered "non-warrantable" from a conventional lending standpoint which truncates your financing options.

FHA just requires no more than 25% commercial space in a condo project - is your condominium FHA approved? You can check it out at or if it's not approved they can apply for their FHA loan approval, and then you would have FHA financing as a potential option to refinance into.

Do you know what type of financing do you have now? Who is your mortgage lender? Have you approached them to see what type of refinance terms you'd be eligible for? Was your condominium project once less than 23% commercial space/was there commercial space added recently?
0 votes Thank Flag Link Wed Aug 24, 2011
I've run into this problem with a couple of condos that I have sold. First Republic Bank might do the loan but will require a large amount of equity. Another option which is more complicated but would be worth investigating is changing the structure of the HOA. In some buildings it may be possible to split the property into separate condo associations; one that is the commercial space and one for the residential. It would require legal assistance and the cooperation of the other owners.
0 votes Thank Flag Link Wed Aug 24, 2011
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