Hotel Loans Nationwide

Conventional loans are serviced by a traditional financial institution that are secured by a first lien position. Conventional loans do not require the borrower to have previous borrowing experience. They may also be used for small loan balances and specialty properties.

Loan Parameters

The LTV for a conventional loan for a hotel have a maximum of 75 to 80%. Borrowers should have “hard cash” equity invested in purchase transactions, and should be able to maintain a post-closing liquidity sufficient to service their debt for several months as well as an overall net worth equal to or greater than the requested loan amount.


Term and Amortization: The term and amortization depend on the lending institution and the type of property. The term can vary from 3 to 15 years while the amortization will be in between 10 and 30 years.

Recourse: Conventional hotel loans can be full recourse, limited recourse, or non-recourse.

Loan Assumption: Conventional hotel loans may or may not be assumable. Assumption usually occurs when a borrower sells the property that secures the loan and the purchaser takes over the loan.

Prepayment Penalty Structures

Yield Maintenance: (Loan balance at time of payoff) * (note rate - new cost of funds) * (# years left in loan) * (365/360)

Breakfunding: (Loan balance at time of payoff) * (original cost of funds - new cost of funds) * (# years left in loan) * (365/360)

Declining (Step-Down) Prepayment Penalty: A declining prepayment penalty may be structured in a variety of ways, but always has the same feature of the prepayment penalty lessening by 1% per step with the last 3-12 (or more) months open to prepay or refinance without penalty.

No upfront costs or obligations.