Hotel lending surged 76% year-over-year in Q3 2025, according to the Mortgage Bankers Association — one of the strongest quarterly rebounds in any commercial real estate sector. But getting a commercial mortgage on a hotel is not like financing an apartment building or a strip center. Lenders underwrite hotel deals differently, require tighter coverage ratios, and want to see evidence that the business runs before they’ll commit capital. Here’s what you need to know before you apply.
What you’ll learn:
- Why hotel financing works differently from other commercial mortgages
- What lenders actually look at when underwriting a hotel deal
- The loan programs available in 2026 — with typical rates and terms
- How brand affiliation affects your financing options and pricing
- What documentation you’ll need and how to prepare
Why Hotel Financing Is Different from Other Commercial Mortgages
Most commercial mortgages are underwritten primarily on the property. The building has a value, it generates rents, and those rents service the debt. Hotels don’t work that way.
A hotel signs a new lease with every guest, every night. There’s no long-term tenant anchoring the income. Revenue fluctuates with occupancy, average daily rate (ADR), and seasonality — and all of those variables shift with the economy, local competition, and travel demand.
Lenders know this, which is why they underwrite hotel deals more conservatively than most other income-producing commercial real estate. You’re not just financing a building. You’re financing an operating business that happens to own real estate.
What Lenders Actually Look At
When a lender evaluates a hotel loan application, they go deeper into the operating performance than you’d see on a standard commercial deal. Here’s what drives underwriting:
Revenue Per Available Room (RevPAR) is the single most important performance metric for hotel lenders. It combines occupancy and ADR into one number and tells the lender how efficiently the property generates income across all its rooms — not just the occupied ones.
Trailing 12-month P&L (T-12) is the foundation of hotel underwriting. Lenders want to see actual income and expenses, not projections. Three years of historical P&Ls are standard, and lenders will reconcile them against your tax returns. If the numbers don’t align, expect questions.
Debt service coverage ratio (DSCR) requirements are tighter for hotels than for most commercial property types. Most hotel lenders require a minimum DSCR of 1.40x to 1.50x — compared to 1.20–1.25x for a stabilized multifamily deal. That extra cushion accounts for revenue volatility and operating cost sensitivity.
Loan-to-value (LTV) limits are lower too. Expect 55–70% LTV on hotel deals, versus 75–80% on multifamily or industrial. Lower LTV means more equity required from the borrower.
Brand affiliation matters enormously. Lenders treat flagged properties (Marriott, Hilton, Wyndham, Choice, IHG, etc.) very differently from independent hotels. More on that below.
Management experience carries real weight. Lenders want to see that the operator has run a hotel before. First-time owners face steeper hurdles, especially for larger or more complex properties.
Property condition and PIP — if a franchised property has a pending Property Improvement Plan required by the brand, lenders factor that deferred capital obligation into the loan sizing. Outstanding PIP reduces what you can borrow.
Hotel Loan Programs Available in 2026
Several distinct capital sources lend on hotels, and each has a different use case.
Conventional commercial loans are the baseline for stabilized, well-performing hotels. In 2026, rates for branded hotels with strong RevPAR run 6.5–9.5%, with amortization up to 25–30 years and terms of 5–10 years. Banks and credit unions that focus on hospitality are the primary sources here.
CMBS (conduit) loans are the primary vehicle for larger stabilized hotel deals — typically $5M and up. Fixed-rate, often non-recourse, with 10-year terms. In 2026, CMBS hotel spreads run roughly 150–180 basis points over the 10-year Treasury, producing all-in rates in the 7–10% range depending on asset quality and brand. One important caveat: many CMBS conduits are selective about independent hotels. If your property doesn’t carry a national flag, some conduits won’t quote it.
SBA 7(a) loans are one of the strongest options for owner-operators buying or refinancing a smaller hotel or motel. Per SBA program guidelines, the maximum loan amount is $5 million, terms extend up to 25 years on real estate, and the down payment for an acquisition can be as low as 10%. The SBA evaluates both the real estate and the business operations. Rates are variable, typically tied to the prime rate.
Bridge loans come into play for acquisitions where the property isn’t stabilized yet, or for repositioning plays where you’re buying an underperforming hotel and planning to renovate or re-flag it. Bridge rates for hotel deals run 10.5–12.5% — higher than for multifamily or industrial, reflecting the operational complexity. The exit strategy is everything here: lenders want a documented plan for how the deal refinances into permanent financing after stabilization. For more on how bridge loans work in practice, here’s our guide to bridge loans for commercial real estate investors.
| Loan Type | Rate Range | Max LTV | Term | Best For |
|---|---|---|---|---|
| Conventional | 6.5–9.5% | 65–70% | 5–10 yr | Stabilized branded hotels |
| CMBS | 7–10% | 60–65% | 10 yr | Larger stabilized, non-recourse |
| SBA 7(a) | Prime-based (variable) | Up to 90% | 25 yr | Owner-operators, smaller hotels |
| Bridge | 10.5–12.5% | 65–70% | 12–36 mo | Acquisitions, repositioning plays |
Branded vs. Independent: Why the Flag on the Door Matters to Lenders
Brand affiliation is one of the most consequential factors in hotel underwriting — and it’s something a lot of buyers underestimate.
A branded hotel flagged under a major chain gives lenders predictability. RevPAR bands are documented and benchmarkable. The brand’s reservation system drives consistent occupancy. There’s a corporate entity behind the franchise agreement. Lenders treat all of that as lower risk. You’ll see better pricing, higher LTV, and more capital sources willing to engage.
An independent hotel is a different story. The income depends entirely on the operator’s ability to generate demand without a brand. Most CMBS conduits won’t quote independent properties. Those that will price the additional risk at roughly 30 basis points wider than a comparable flagged asset — and with tighter LTV.
Soft brands and boutique collection flags (Autograph, Tapestry, Tribute Portfolio, etc.) typically land somewhere in between. Sometimes treated like full-flag branded, sometimes not, depending on the lender and the specific flag.
If you’re buying an independent hotel with plans to affiliate it with a brand post-close, have the franchise application in process before applying for financing. Lenders want to see that path documented.
Looking at a hotel acquisition or refinance? We work with capital sources that specialize in hospitality financing across conventional, CMBS, SBA, and bridge programs. Schedule a 15-minute call →
From a Recent Deal
From a recent deal: I structured a CMBS refinance on a larger hospitality asset — a hotel and entertainment venue in a Caribbean market. The borrower had a mix of existing real estate debt and high-rate equipment financing on property assets, and the goal was to consolidate everything into a single, lower-cost permanent structure. The CMBS execution let us do exactly that: one loan, fixed rate, non-recourse, that wiped out the equipment debt and reset the entire capital stack at a materially lower blended cost. It’s the kind of transaction that works because CMBS underwriters are willing to look at the full income picture of the operating business, not just the real estate in isolation. For hotel deals, that flexibility can make a real difference.
What Documentation You’ll Need
Hotel deals require more paperwork than most commercial loans. Come to your lender organized with:
- Three years of business tax returns (hotel entity)
- Three years of personal tax returns (sponsor)
- Trailing 12-month P&L (T-12) and year-to-date financials
- STR or CoStar comp set data on RevPAR benchmarks
- Franchise agreement or license agreement (if flagged)
- Management agreement (if third-party managed)
- Operator resume or portfolio track record
- Environmental Phase I report
- Recent appraisal (if available)
- Outstanding PIP documentation from the brand (if applicable)
The T-12 and tax return alignment is where deals most often stall. If your reported income on the tax return differs materially from what you’re showing the lender on the P&L, lenders will ask for an explanation — and that conversation is easier to have before the underwriting process starts.
How to Strengthen Your Position Before Applying
Stabilize operations before you apply for permanent financing. If you’ve recently acquired or renovated the property, give it 6–12 months to normalize. Lenders want to underwrite actual operations, not projections.
Clear the PIP first. Outstanding brand requirements for property improvement reduce what a lender will lend. Getting ahead of deferred maintenance and brand standards before applying usually results in better terms.
Document your management track record. If you’re an experienced operator, put together a clean one-page track record: properties managed, years in operation, occupancy and RevPAR trends. For independent hotels especially, lender confidence in the operator is the deciding factor.
Consider a bridge loan for a value-add play. If you’re buying a property that needs repositioning, bridge financing gives you the runway to stabilize before refinancing into permanent debt at better terms. We can usually structure hotel bridge loans and line up the permanent take-out in parallel, so you’re not refinancing blind 18 months later.
Hotel and hospitality lending is a specialized corner of the commercial mortgage market. We’ve placed hospitality deals from small limited-service motels to larger full-service properties, and we have active lender relationships that specifically focus on this asset class. For a comparison of how hospitality deals differ from other income-producing commercial financing, here’s our guide to multifamily loans for 5+ unit properties.
Ready to Finance Your Hotel or Motel?
We’re a commercial mortgage brokerage serving investors and business owners nationally, with active lender relationships across conventional, CMBS, SBA, and bridge programs for hospitality assets. Send us your scenario — we’ll respond within one business day with realistic terms.
Frequently Asked Questions
What credit score do you need for a hotel commercial mortgage?
Most conventional commercial lenders want a minimum personal FICO of 680–700 for hotel deals. CMBS programs don’t always have a stated floor but factor credit history into pricing. SBA 7(a) lenders typically want a 650 minimum, though the SBA itself doesn’t set a hard credit score requirement.
What DSCR do lenders require for a hotel loan?
Hotel lenders typically require a minimum DSCR of 1.40x to 1.50x — higher than the 1.20x minimum on a stabilized multifamily deal. Coastal and seasonal properties often face 1.50x minimums because of revenue volatility. Lenders will also stress-test your P&L at lower occupancy levels to see if the deal holds.
Can you get an SBA loan to buy a hotel?
Yes. SBA 7(a) loans are commonly used to acquire small hotels and motels, with a maximum of $5 million, terms up to 25 years on real estate, and down payments as low as 10% for eligible borrowers. The SBA evaluates both the property and the business operations, so management experience carries real weight.
Is it harder to finance an independent hotel than a branded one?
Yes, generally. Branded hotels give lenders documented RevPAR benchmarks, reservation system-driven occupancy, and a corporate franchise agreement behind the income. Independent hotels require the lender to underwrite the operator’s ability to generate demand without those advantages. Pricing is wider and some CMBS conduits won’t quote independent deals at all.
What is the typical LTV on a hotel commercial mortgage?
Hotel mortgages typically close at 55–70% LTV — lower than multifamily (75–80%) or industrial (70–75%). Properties with strong DSCR and brand affiliation can access the higher end. Weaker operational performance or an independent flag pushes LTV toward 55–60%.
This article is for informational purposes only and does not constitute financial, legal, or tax advice. Loan terms, rates, and availability vary by borrower, property, and market conditions. Consult Willowbrook Capital for scenario-specific guidance.
