Condotel Financing: How to Buy a Hotel-Branded Condo Unit

Condotels — condominium units in buildings that operate with hotel-style amenities, front desk, and often a rental pool program — are popular in resort markets including Miami Beach, Myrtle Beach, Orlando, and mountain ski destinations. They offer the appeal of a vacation asset that generates income when you are not using it.

But condotels cannot be financed with conventional Fannie Mae or Freddie Mac loans, FHA loans, or VA loans. They are always non-warrantable — and that means financing them requires specialty programs.

Why Condotels Are Non-Warrantable

Agency guidelines prohibit financing on projects where units are subject to mandatory rental pool participation, where the building operates as a hotel, or where the primary HOA relationship is with a hotel operator. These features describe most condotels exactly.

Portfolio Loans for Condotel Purchases

Portfolio lenders who retain loans in-house can underwrite condotels based on their own credit standards rather than agency guidelines. These lenders do exist — and they finance condotel purchases regularly — but you must work with brokers who have access to these specific lenders.

Typical condotel portfolio loan terms: 25 to 35% down payment, rates 1 to 2% above conventional investment property rates, credit score minimums of 660 to 700, and full income or DSCR qualification depending on the program.

DSCR for Condotels

Some DSCR lenders will finance condotel units if they can demonstrate rental income through historical platform data or comparable unit rental analysis. This requires a lender specifically experienced with condotel assets — not all DSCR lenders accept them.

Due Diligence Before Purchase

Understand the rental pool agreement fully before committing. Review the HOA financials and reserve adequacy. Verify that the building has sufficient non-hotel-operator ownership to qualify for any financing program. Know your exit financing options before you go under contract.

At East Coast Mortgage, we access portfolio and DSCR lenders for condotel acquisitions. Submit your scenario and we will identify the right program for your property.