Condotel Loan Requirements And Guidelines

This BLOG On Condotel Loan Requirements And Guidelines Was UPDATED On June 25, 2017

A Condotel is a condominium unit in a hotel complex. A certain percentage of hotel units are designated as condotels. Condotels are sold to private investors or condo buyers who want to use it as primary, second, investment homes. Fannie Mae and Freddie Mac does not buy condotel loans so all condotel financing is funded by portfolio lenders.

With the new year comes new Condotel Loan Requirements.

  • Condo Hotel units are becoming more popular than ever and Condotel mortgage loan requests are at an all time high since the real estate and credit collapse of 2008
  • Condotel Loan Requirements are different than traditional condo or single family home loan requirements.

Condotel Loans Are Portfolio Loans

Condotel mortgage loans are portfolio loans.

  • By portfolio loans, the lender will not be selling a condotel mortgage loan to the secondary market. 
  • They will be holding the loan in their own portfolio.

Condotel Loan Requirements And Guidelines

  • Condotel Loan Requirements include that the Condotel need to be at least 500 square feet
  • Have a separate kitchen area with a full functional kitchen
  • The condotel units needs to have at least one bedroom
  • Efficiency or studio Condotel units do not qualify
  • There cannot be any major litigation pending and the Condo Hotel cannot be in financial distress such as a pending bankruptcy
  • The Condo Hotel cannot have any major structural issues or pending major building violations as well
  • Condo Hotel Complex HOA needs to be sufficient reserves

Reserve Requirements

Reserves is another Condotel Loan Requirements.

  • We require that you have at least a one year reserve of principal, interest, taxes, and insurance for the subject Condotel unit as well as your principal residence. 
  • The Condotel Loan Requirement is that you have at least three months of reserves in cash or stocks and the remaining nine months can be in retirement funds, annuities, or other assets.

Down Payment Condotel Loan Requirements

Other Condotel Loan Requirement include a minimum down payment of 25% for primary and second homes.

  • Condotel Unit owners who own a primary property and another property and the subject condotel unit is going to be the third property, it will be considered an investment property.
  • Down payment requirements are different on investment condotels.

Higher Down Payment Requirements On Investment Condotel Units

Condotel Loan Requirements with investment condotel units are the same as second home with the exception it requires more down payment.

  • Investment Condotel units require a 60% loan to value. 
  • Reserve requirements are the same.
  • Investment condotel units have slightly higher interest rates than primary and/or second home condotel units.
  • Minimum loan size on Condotel loans are set at $100,000. 
  • It can be a lower loan amount on a case by case basis. 
  • There is no maximum loan amount. 
  • The reason there is a minimum loan amount Condotel Loan Requirement is because it takes the same amount of time, same amount of paperwork, and the process is the same to underwrite a $100,000 Condotel mortgage loan as it is a $1 million dollar Condotel mortgage loan.

Related> Condo Hotel Financing

Condotel Loan Questionnaire

There is a one page Condotel Questionnaire form that needs to be completed by the Condo Hotel Homeowners Association representative that will ask these specific questions.

  • Occupancy will be asked
  • Any pending litigation will be asked
  • Number of units will be asked

 Minimum Credit Score And Credit Requirements

  • Another Condotel Loan Requirement is that the Condotel unit mortgage loan borrower needs a minimum credit score of 680 FICO. 
  • One year reserves on primary residence and other properties including proposed condotel purchase of P.I.T.I.
  • 25% down payment on Condotel Purchase Loans and 75% LTV on refinance mortgages.
  • 4 year waiting period after bankruptcy and/or foreclosure to qualify for Condotel Financing.

Condotel Unit Buyers interested in getting approved for condotel financing, please contact us at 1-800-900-8569 or email us at

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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