Warrantable vs Non-Warrantable Condos: What Condotel Buyers Need to Know

When you’re exploring the idea of buying a condotel, you’ll quickly run into a term that can make or break your financing options: warrantable vs non-warrantable.
It might sound complicated, but don’t worry. I’ll walk you through it. Understanding the difference helps you see why some lenders say “yes” and others say “no,” and more importantly, how to set yourself up for success.

What Makes a Condo “Warrantable”?

A condo is considered warrantable when it meets the lending standards set by agencies like Fannie Mae and Freddie Mac. This means the building is financially healthy, well-managed, and viewed as a lower risk by lenders.

Some common requirements include:

• A good balance of owner-occupied and rental units 
• A strong homeowners’ association (HOA) with healthy reserves 
• Limited ongoing lawsuits involving the property 
• A building that isn’t primarily commercial space 

When these boxes are checked, financing is typically straightforward.

Why Some Condos Are Non-Warrantable

If the building doesn’t meet those requirements, it’s considered non-warrantable. That label makes financing more difficult because conventional lenders generally avoid these properties.

Common reasons include:

• Too many units being used as rentals 
• Weak or underfunded HOA reserves 
• Ongoing litigation 
• Hotel-like features or operations 

Where Condotels Fit In

Here’s the catch: most condotels fall into the non-warrantable category. They’re designed to operate like hotels, often including nightly rentals, front desk services, and shared amenities. Because of these features, they don’t fit the traditional condo mold.

That doesn’t mean you can’t get financing. It simply means you’ll need to work with the right lender and loan program.

Your Loan Options for a Non-Warrantable Condotel

Even if a condotel is labeled non-warrantable, there are still ways to secure financing:

• Portfolio or non-QM loans: Offered by lenders who keep loans in-house rather than selling them. 
• DSCR loans: These may use projected rental income to help you qualify. 
• Larger down payments and reserves: A bigger upfront investment can improve your approval chances. 

The key is to prepare early and connect with a lender who understands this type of property.

Why This Matters for You

If you’re buying in Park City or another vacation-heavy market, you’ll find plenty of condotels that look like great investments. But the financing details often determine whether that opportunity becomes reality. By understanding warrantability, you’ll avoid surprises and approach your purchase with confidence.

Conclusion

The difference between warrantable and non-warrantable condos isn’t just a technical detail—it’s often the deciding factor in whether you’re approved for financing. Condotels usually fall into the non-warrantable category, but with the right guidance, you still have a clear path forward.

That’s where I come in. I specialize in condotel financing and can help you navigate the process from start to finish. If you’re considering a condotel purchase, let’s discuss your options and find the program that works best for you.