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Condotel financing.
A condo in a building run like a hotel. Agency lenders will not touch it. There is a specific set of programs that will.
Resort and hotel-style units
What makes a building a condotel
Individually deeded units, operated with hotel services. The markers underwriting looks for are a front desk and check-in, daily or weekly rentals, an on-site rental or management program, housekeeping and room service, a franchise flag, and units that are furnished and rented as rooms rather than lived in.
You do not need all of them. A front desk plus a nightly rental program is usually enough for a project to be treated as a condotel regardless of what the marketing calls it.
Why agency lenders decline them
Fannie Mae and Freddie Mac treat hotel-like operation as commercial rather than residential. The collateral behaves like hospitality: occupancy is seasonal, income is volatile, and resale is a thinner market. That is a reasonable position for them to take, and it is why the loan has to come from a portfolio or non-agency program instead.
How these get underwritten
Expect a harder look at the project than at you: the association’s finances and reserves, the insurance, how much of the building the rental program controls, and whether the unit is big enough and equipped enough to function as a residence. Expect the appraiser to be someone who has valued this kind of property before, because ordinary residential comparables do not exist here.
If you intend to hold it purely as an income property, a DSCR loan is sometimes the cleaner route, since it qualifies on what the unit earns rather than on your personal income.
Questions people ask
Is a condotel the same as a non-warrantable condo?
No. Every condotel is non-warrantable, but most non-warrantable condos are ordinary residential buildings that failed a specific agency test. A condotel fails because of how the building is operated.
Can I live in it?
Sometimes, and sometimes the association restricts how many nights an owner may occupy. Read the declaration before you write the offer.
Does the rental income help me qualify?
On some programs yes, on others no. It depends on the program and on how the rental agreement is written, so send the agreement to your loan officer early.
Program availability varies by state and by project. A licensed loan officer will confirm what is available for your situation.
Find out what you qualify for.
A licensed loan officer reviews what you send and tells you where you stand, in writing. No cost, and no obligation to go further.