Palm Springs Condo-Hotel Mortgage: How to Finance a Condotel in the Desert in 2026

I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. I’ve been in California mortgage lending since 2000 and founded DiVita Home Finance in 2007. Call (800) 239-1103.

Palm Springs is one of California’s most active condotel markets — resort communities where individual condo units sit inside hotel operations, participate in managed rental pools, and are sold to buyers who want a combination of personal use and investment income. If you’re buying one of these properties, conventional financing is not an option. Fannie Mae explicitly classifies hotel-condo hybrid projects as ineligible. The path to financing runs through portfolio lenders who understand the Palm Springs resort market specifically — and DiVita Home Finance has those relationships.

How to Identify a Condotel in Palm Springs

Not every condo complex in Palm Springs is a condotel. The distinction matters for financing. Look for these characteristics in the property listing and HOA documents: the project operates under a hotel brand or name; there is a front desk, concierge, or daily housekeeping available to owners; the HOA or a property management company operates a rental program where your unit can be rented when you’re not occupying it; or the CC&Rs include provisions about mandatory participation in a rental pool. If you see “hotel condo,” “resort condo,” or “full hotel amenities,” assume condotel classification until proven otherwise.

Standard Fannie Mae-eligible condos in Palm Springs — projects without hotel operations, dedicated rental pools, or hotel services — can be financed conventionally as long as the project is warrantable. The condotel issue applies specifically to the resort-hotel hybrid projects that make up a meaningful portion of Palm Springs’ condo inventory.

Financing a Palm Springs Condotel: What Works

Portfolio condotel loans from investors who have specifically underwritten Palm Springs resort properties are the primary solution. These lenders have reviewed Palm Springs’ condotel market, understand the rental pool dynamics and HOA structures common to desert resort communities, and have built loan programs that accommodate this property type. Requirements are stricter than conventional: typically 25–35% down, 720–740+ credit score, and 12 months reserves. Rates run approximately 0.5–1.0% above comparable conventional rates.

DSCR loans for investment condotels work well if your primary intent is rental income. Qualifying on the unit’s projected short-term rental income rather than your personal income simplifies the process — Palm Springs commands strong STR rates year-round, and many condotel units generate DSCR ratios comfortably above 1.0 when the rental pool income is used in the calculation. Select non-QM DSCR investors have specifically approved Palm Springs condotel projects.

What to Pull Before You Make an Offer

Before going under contract on a Palm Springs condo that might be a condotel: request the current HOA master insurance policy (lenders need this), get the CC&Rs and look for rental pool provisions, ask the listing agent whether previous buyers have had financing fall through and why, and call DiVita before your offer is accepted — we can confirm condotel classification and identify the right lender before you’re in contract.

See the full California Condotel Mortgage guide →