Financing Homes in Lake Tahoe and Truckee since 1992.

Buying a Condotel in Lake Tahoe

The greater Tahoe-Truckee area is known around the world for its diverse winter and summer sporting options. Thousands of condos have been built around ski resorts and the lake in order to attract adventurers. Some individuals own condos to use only during the ski season. Others use a condo as an investment, renting it out to generate income year round.

While owning a condo in the Tahoe area certainly has its benefits, buying a condo can also be challenging. Because a rental property is different than a residential property, special considerations must be taken when shopping for a condo and securing a loan. It’s essential that you work with an experienced, local mortgage banker who understands the market in the Tahoe-Truckee region and can guide you through the condo-buying process. At Sierra Pacific Mortgage Lake Tahoe, we’re proud to be your local condo loan experts of choice.

Located in Incline Village, we are experts in Lake Tahoe real estate and offer an array of loan products designed to meet the needs of buyers in our local area. We are proud to serve the communities of Truckee, Crystal Bay, Incline Village, Glenbrook, Zephyr Cove, Stateline, South Lake Tahoe, Tahoma, Homewood, Tahoe City, Carnelian Bay, Tahoe Vista, Kings Beach, Genoa and Granite Bay.

How Do Condo Loans Differ from Traditional Home Loans?

Prospective condo owners are often permitted to take out traditional home loans to buy condo complexes. These types of loans tend to feature liberal repayment terms and low interest rates. While residential condo loans are considered ideal by most prospective buyers, your eligibility for one of these loans may be affected if you want to buy a property that is considered a condotel. Your mortgage banker will help you determine whether or not the property you want to buy will qualify as a condotel.

Get Familiar with Condotels

The word condotel refers to a type of condominium that can be rented out on a nightly basis. For most Tahoe-Truckee properties, the homeowners association (HOA) that governs the complex determines whether it is designated as a condotel. If you’d like to purchase a property that’s considered a condotel, you are not likely to qualify for a Fannie Mae home loan. Instead, you will need to apply for a condo loan geared especially towards condotel owners.

Financing the Purchase of a Condotel

Even though restrictions don’t allow buyers to finance a condotel with a Fannie Mae loan, you can use a condo loan to purchase this type of property. At Sierra Pacific Mortgage Lake Tahoe, one of our friendly mortgage bankers will be happy to explain your condotel financing options. You should know that financing rates for condo loans do tend to be a bit higher than those for traditional Fannie Mae loans.

Depending on your buying situation, you may also be required to secure a condotel with a larger down payment than would be used to secure a more traditional residential property. Your mortgage banker can go over rates with you so that you understand your options and the down payment restrictions you might encounter.

Financing 101: Who Determines if My Condo is a Condotel?

Prior to financing a loan, lenders send condo questionnaires to the HOA that governs a property. Lenders then evaluate this information to determine if you are eligible for a Fannie Mae loan.
Of all the questions on the survey, the most important asks whether your condo can be rented out on a night-to-night basis. Condos are generally considered condotels if they can be rented out as such.

If you apply for a Fannie Mae loan and the lender determines that you are ineligible, your mortgage banker will help you explore other options. Before approaching a lender, speak with a representative from the HOA that governs the condo you’re considering buying. Ask if the condo can be rented on a nightly basis. If you need help deciding what to ask the HOA rep, speak with your mortgage banker beforehand.