You find the perfect slopeside condo, only to hear it is “non‑warrantable.” That label can feel like a red light when you are eager to buy or invest in Telluride. The good news is that many buyers finance these properties successfully with the right plan, timeline, and lender fit. In this guide, you will learn what non‑warrantable means, why it is common in Telluride condo‑hotels, the financing paths available, and the documents lenders will ask for so you can move forward with confidence. Let’s dive in.
What non‑warrantable means
A warrantable condo meets the eligibility rules of major agencies like Fannie Mae or Freddie Mac. Lenders can sell those loans into the secondary market, which often means easier approvals and better pricing. A non‑warrantable condo does not meet one or more of those project standards, so standard conforming financing may be limited or unavailable.
Each lender evaluates condo projects against agency rules and their own overlays. One building can be warrantable at one lender and not at another. Because guidelines evolve, it is important to confirm status early with a lender that reviews the specific project and unit you are considering.
Why Telluride condos are often non‑warrantable
Telluride’s resort profile means many buildings blend residential use with hotel‑like services. That mix can be a red flag for agency reviews. Here are common reasons local projects are considered non‑warrantable:
- High investor share and low owner occupancy. Second‑home and short‑term rental ownership is common, which can exceed agency thresholds.
- Condo‑hotel operations. Mandatory or dominant rental pools, central reservation systems, and shared hotel services can push a project into commercial territory.
- Significant commercial space. Restaurants, retail, or larger non‑residential areas within the legal project can affect eligibility.
- Concentrated ownership. If a developer or small group holds many units, lenders may view the HOA as higher risk.
- HOA financial issues. Low reserves, high delinquency, large special assessments, or weak financials are frequent disqualifiers.
- Litigation or title questions. Active disputes or unresolved condo document issues usually pause agency approval.
- Small or phased projects. Very small associations or projects still under development can miss investor minimums.
- Insurance gaps. Missing or inadequate master insurance is a common stall point.
- Short‑term rental rules. Town of Telluride and San Miguel County require licensing and tax compliance. Restrictions or lapsed permits can influence lender reviews and income treatment.
How to finance a non‑warrantable condo
Financing is available, but it looks different than a standard conforming loan. Plan for the following:
- Down payment and LTV. Expect a larger down payment. Many lenders look for 20 to 30 percent minimum, and sometimes more based on project risk and your profile.
- Rates and pricing. Rates are typically higher than conforming loans because lenders are taking on more risk and cannot sell the loan easily.
- Loan size and term. Portfolio and jumbo loans are common. Some lenders offer 30‑year fixed, while others favor adjustable or 5 to 10‑year balloon options.
- Stronger underwriting. Be prepared for higher credit score expectations, lower debt‑to‑income ratios, and larger liquid reserves.
- Rental income treatment. If you plan to use short‑term rental income to qualify, lenders often require multiple months or years of documented performance. Projected income is treated cautiously.
- Appraisals. Appraisers may treat condo‑hotels as unique property types. Comparable sales can be limited, which may affect value.
- FHA/VA. Many condo‑hotels are not eligible unless the project obtains agency approval, which is rare in small resort buildings.
Lenders who serve resort markets
You will find the most success with lenders who understand Telluride’s condo‑hotel landscape.
- Local community banks and credit unions. These lenders often keep loans on their books and know local HOA practices and rental realities.
- Regional and national portfolio lenders. Private banks and portfolio lenders can set their own project standards and tailor solutions, often at a premium.
- Experienced mortgage brokers. A broker who knows resort and second‑home financing can match your scenario with lenders that already approve similar buildings.
- Private or hard‑money lenders. Useful as a bridge or when timing is tight, but expect higher rates, fees, and shorter terms.
A step‑by‑step plan to close smoothly
Follow a simple playbook to keep momentum and avoid surprises.
Start with lender calls before you shop. Share the building name and rental setup so the lender can preview the project. Ask about minimum down payment, reserves, and product options for non‑warrantable loans.
Align your budget with realistic terms. Price out scenarios with 20 to 30 percent down, slightly higher rates, and extra reserves. Confirm whether rental income will count, and how much.
Get the HOA packet early. Build in time to collect governing documents, budgets, reserves, insurance, owner occupancy data, and any rental‑pool agreements. In busy resort seasons, full packets can take 2 to 4 weeks or more.
Verify STR compliance. Confirm licensing, permitting, and local lodging tax registration for the unit and association. Lenders often ask for proof when rental income is part of your plan.
Prepare for appraisal variability. Sales comps for niche buildings can be thin. Keep a cushion in your funds to close in case the appraised value comes in low.
Negotiate timeline and documentation. Clarify who pays for HOA docs. Build lender review deadlines into your contract so you can pivot if the project does not pass.
The lender documentation checklist
Organize documents up front to speed underwriting. Your lender may not need every item below, but this list covers typical requests for Telluride condo‑hotel and non‑warrantable projects.
Project documents (HOA)
- Declaration, CC&Rs, bylaws, articles, and rules
- Current budget, year‑to‑date financials, and bank statements if requested
- Reserve study or reserve policy and current balance
- Recent HOA meeting minutes and any special assessment notices
- Owner roster with owner‑occupancy and leasing percentages
- Master insurance declarations, limits, deductibles, and fidelity coverage
- Details on pending litigation or claims
- Project map, legal description, common elements, and any commercial spaces
- Management agreement and contact information
- Rental‑pool or management program terms, revenue allocation, and reservation control
Unit documents
- Executed purchase contract and all addenda
- HOA estoppel letter with dues, assessment status, and arrears
- Any unit‑specific rental agreements, plus revenue history or P&L if using income to qualify
- Lender‑ordered appraisal suited to condo‑hotel valuation
- Evidence of required unit insurance
Borrower documents
- Standard income and asset documentation or alternative documentation if allowed
- Credit report and explanation of ownership structure if using an entity
- Proof of liquid reserves beyond your down payment
- If using rental income, multiple years of tax returns, management statements, or 12 to 24 months of booking history
Common pitfalls to avoid
- Relying on advertised rental projections without proof. Lenders typically need documented and tax‑reported income or a track record from the management program.
- Assuming FHA or VA will work. Many Telluride condo‑hotels are not eligible without specific project approvals.
- Skipping STR rule checks. Local permits, licensing, and lodging tax registrations matter for both feasibility and underwriting.
- Overlooking concentrated ownership. If a single owner controls many units, expect tighter conditions or lender declines.
Putting it all together
If a condo you love is labeled non‑warrantable, you still have a path to closing. The keys are early lender engagement, realistic terms, and a complete HOA packet so underwriting can move quickly. With the right team and timeline, buyers regularly finance condo‑hotel and resort buildings across Telluride and San Miguel County.
If you want a calm, local guide to coordinate lenders, gather documents, and manage a clean escrow, connect with Allison Templin. She will help you understand the financing landscape, align your goals, and move with confidence.
FAQs
What makes a condo non‑warrantable in Telluride?
- Projects that fail agency standards due to condo‑hotel features, higher investor concentrations, commercial space, HOA financial issues, or litigation are commonly considered non‑warrantable.
Can I use short‑term rental income to qualify for a loan?
- Sometimes. Lenders often require documented history, such as tax returns or 12 to 24 months of booking statements, and may count only a portion of that income.
Are FHA or VA loans available for condo‑hotels?
- Often not. Many condo‑hotel projects are ineligible unless the association secures specific agency approval, which is uncommon in smaller resort buildings.
How much down payment should I expect?
- Many buyers should plan for at least 20 to 30 percent down, with higher amounts possible depending on the project and your profile.
How long does closing take on a non‑warrantable condo?
- Timelines vary, but assembling HOA packets and project reviews can add weeks. Plan for extra time to collect documents and complete appraisal and underwriting.
What documents will my lender ask for on a condo‑hotel?
- Expect full HOA financials, insurance, owner‑occupancy data, rental‑pool terms, unit‑level rental histories, an appraisal, and stronger borrower reserves and credit.
