How to Finance a Condotel in Hawaii: The Complete Guide

What is a Condotel?

You found the perfect property in Waikiki or Maui. It has an ocean view, a front desk, and you can rent it out on Airbnb when you aren't there. But when you apply for a loan, your bank denies it. Why?

This property is likely classified as a "Condotel" or a "Non-Warrantable Condo." Because these buildings operate like hotels (daily cleaning, front desk services), Fannie Mae and Freddie Mac will not back the loans. Most mainland banks will simply say "No."

Key Insight

Traditional lenders view condotels as "non-warrantable" because they don't meet Fannie Mae and Freddie Mac guidelines. This doesn't mean you can't get financing—it just means you need the right lender.

How to Finance a Hawaii Investment Property

You need a Portfolio Loan. Unlike generic lenders, we work with wholesale investors who specialize in Hawaii resort properties.

Key Differences in Financing:

1Down Payment

Expect to put down 25-30% (vs. 20% for a standard condo). This higher down payment reflects the investment nature of the property and compensates for the increased risk lenders take on non-warrantable condos.

2Reserves

You may need 6 months of payments saved in the bank. Lenders want to ensure you can cover the mortgage during slower rental seasons or unexpected vacancies.

3Interest Rates

Rates are slightly higher than a primary residence, but the rental income potential often offsets the cost. Many Waikiki condotels generate strong short-term rental revenue that more than covers the monthly payment.

Why Traditional Banks Say "No"

Hotel-like amenities (front desk, daily housekeeping) disqualify the property from conventional financing
Short-term rental restrictions make the property "non-warrantable" under Fannie Mae guidelines
Mainland lenders lack experience with Hawaii's unique resort property market
High owner-occupancy requirements can't be met in hotel-condo hybrid buildings

The Portfolio Loan Advantage

Portfolio loans are held by the lender rather than sold to Fannie Mae or Freddie Mac. This gives lenders flexibility to approve properties that don't fit conventional guidelines. For condotel financing in Hawaii, this is often your only path forward.

We work with specialized lenders who understand the Honolulu County market and have closed hundreds of condotel transactions. They know which buildings qualify, what documentation you'll need, and how to structure the loan for approval.

Success Story

Last month, we helped a California investor close on a Waikiki condotel after three mainland banks rejected the application. With a 30% down payment and proper documentation of rental income potential, we secured portfolio financing at a competitive rate. The property is now generating $4,500/month in short-term rental income.

Don't Let a "No" Stop Your Investment

We close condotel loans in Honolulu County every month. If you've been told "no" by a traditional lender, or if you're just starting your search for a Waikiki investment property, we can help you navigate the financing process.

The key is working with a broker who understands non-warrantable condo financing and has direct relationships with portfolio lenders who specialize in Hawaii resort properties.

Ready to Finance Your Hawaii Condotel?

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Buying a "Condotel" in Waikiki: What Lenders Won't Tell You