Know TIC Loan Guidelines Before You Start Your Search

Tenancy-in-common (TIC) interests require what’s called fractional financing. You essentially have a loan on your interest in the property instead of sharing one loan with all the other TIC owners.

Many buyers seriously consider TICs because they know they’ll typically get better space in a more central location than they would from a condo.

But the loan guidelines for fractional financing are different from the ones for condo loans. So before you hit the open house circuit, check out these guidelines courtesy of TIC loan expert Gordon Friedman at Guarantee Mortgage:

– 1% origination fee: All TIC loans require an upfront fee equal to 1% of the loan amount borrowed
– Credit score minimums and loan-to-value: 80% financing allowed with minimum 740 middle credit score, 75% financing allowed with minimum 700 middle credit score
– Minimum down payment required: 20% to $1,000,000, 25% to $1,500,000
– Maximum units in project: 12
– San Francisco properties only
– Minimum size: 600 square feet
– Owner occupancy required: For two- or three- unit buildings, one unit may be rented. Four units or larger require 75% owner occupancy.
– Reserves: Six months of the total housing payment (monthly mortgage, taxes, and HOA dues) must remain in liquid or retirement accounts after close of escrow. Retirement accounts are taken at 60% of value to satisfy the reserve requirement.
– Deposit account and impounds for taxes are NOT required for non-investment property loans.
– Co-signers (i.e.parents) allowed with 25% down payment.
– Maximum loan amount $1,500,000.

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