Condotel and Non-Warrantable Condo Loans are Available

Condominiums and condotels have a lot of appeal in Myrtle Beach, from vacationers looking for a “second” home, to baby boomers wanting to downsize, and real estate investors looking for a good investment.

In the last few years, new lending rules have changed the lending process for homes in general, and for condominiums in particular. The primary reason is the condominium market nationwide has seen its fair share of mortgage defaults and foreclosures the past few years. For the most part many of those mortgages were insured by Fannie Mae, Freddie Mac and FHA. Because of these defaults Fannie and Freddie (as well as FHA) no longer make traditional loans on certain types of properties.

A “Non-Standard” Condominium

As lenders reduce their lending risk, certain condominiums around the country (and in Myrtle Beach) are being specifically excluded from securing traditional conforming financing. These are commonly referred to as “non-warrantable condos.”

A “non-warrantable condo” is a condominium that does not meet eligibility standards set by Fannie Mae and/or Freddie Mac and therefore excludes financing for condos that don’t meet their standard. Your lender will be able to help you assess whether a specific project meets Fannie or Freddie guidelines. If it doesn’t there are other resources to obtain financing including lenders who will make non-warrantable condo loans. So not to worry.

The same set of rules applies to another type of condo classification; one that is normally associated with luxury and vacationing. This is referred to as a “condotel.”


condotel is a blending of the words “condominium” and “hotel”. It describes buildings used as both a condo and a hotel, with owners keeping the rights to rent their units while they’re not actually using them. Most often the rentals of a condotel are managed by an on-site rental company or management team.

Like non-warrantable condos, condotels cannot be financed through Fannie Mae or Freddie Mac. The good news is that mortgage money is available for both non-warrantable condos and condotels.  There are some lenders that are deciding to make the loans in-house, and your real estate agent will have contacts and information in order to obtain one of these loans. Typically, the minimum down payment starts at 25 percent.

Getting a condotel or non-warrantable loan approval is simple.

  1. Provide proof of your income
  2. Prove your assets
  3. Meet credit score requirements, which vary lender to lender

That’s it other than some building/project considerations, but they’re not nearly as tough as what Fannie or Freddie would require for loan approval. And the building requirements are more geared toward making sure the building is well-constructed and insured than anything else. Every reputable condo and condotel in the country, especially Myrtle Beach is going to pass that test.

If you are a prospective condominium or condotel buyer, make sure you have consulted with your real estate agent and mortgage professional to discuss financing before submitting a purchase contract.


The material provided is for informational and educational purposes only and should not be construed as legal, investment and/or real estate advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

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