Hotel acquisition financing for foreign buyers: LTV, DSCR, equity and what banks check

A hotel loan looks like a mortgage and behaves like a business loan. The bank is not lending against the rent of a tenant who has signed a lease; it is lending against the profit of an operating business that has seasons, staff, a brand or a management contract, and a building that needs regular reinvestment. A foreign buyer used to housing mortgages is usually surprised by three things: the bank finances a smaller share of the price, the list of conditions is long, and the loan costs more than a housing loan. This guide explains how lenders think, which numbers they use and how to prepare before you sign anything. It sits next to our guide to hotel real estate for private investors and the piece on how to value a hotel.

Why a hotel loan is not a mortgage

A mortgage rests on two facts: the value of the flat and the income of the borrower. A hotel loan rests on the income of the asset itself. The bank looks at net operating income (NOI), the profit left after the costs of running the hotel and before debt service, and asks whether that profit would still cover the loan if the season were weak.

Four features make a hotel riskier for a lender than an apartment building:

• Revenue resets every night. A hotel has no long leases; occupancy and room rates move with the season, the economy and competition.
• The result depends on the operator. The same building can earn very different profits under two managers, so banks look hard at the operator's track record.
• The building keeps consuming money. Furniture, equipment and technical systems wear out faster than in housing and have to be replaced on a schedule.
• The value of the asset depends on the business. If the hotel closes or loses its licence or brand, the building is worth much less than an operating hotel.

For this reason lenders also look at who runs the hotel and under which contract. We explain the contract types in hotel management agreements, leases and franchise.

How banks size a hotel loan in 2026

HVS, a hotel consultancy, describes the European market at the start of 2026 as follows. Senior euro loans on stabilised hotels are commonly offered at 55% to 65% of the value (loan to value, LTV). Lenders usually ask for a debt service coverage ratio (DSCR) of 1.30 to 1.50, which means the hotel's NOI should be 1.3 to 1.5 times the yearly debt payments. Margins over the base rate are quoted at roughly 1.65 to 3.5 percentage points, and the typical term is five to seven years. European banks remain the main lenders, with the strongest appetite for core countries and for hotels with a strong brand and a proven operating record. Refinancing drives most of the volume, while loans for acquisitions and development remain selective.

Two cautions. These figures describe institutional-size deals. A private buyer of a small hotel will usually deal with a local bank, and the terms are often tighter: lower LTV, shorter term, personal guarantees. We did not find reliable public figures for that segment, so treat the HVS numbers as the best case, not as the standard. And the lender uses the lower of two limits: the LTV limit and the DSCR limit.

Rates in 2026: what the loan really costs

The base rate in euro loans is usually Euribor. The European Central Bank's deposit rate is reported at about 2% to 2.25% in 2026 (one tracker shows 2.25% from 17 June 2026) and three-month Euribor was around 2% earlier in the year; check the current figure on the ECB and Euribor pages before you model anything. HVS notes that renewed inflation in the first half of 2026 raised financing costs, which may limit further falls in hotel yields.

Add the bank's margin of about 1.65 to 3.5 points and a hotel loan costs roughly 3.7% to 5.8% a year before fees. That is our arithmetic on the numbers above, not a quote. Fees (arrangement, valuation, legal) come on top, and a floating rate means your payment moves with Euribor unless you hedge. Match the currency of the loan with the currency of the hotel's revenue: a hotel earns in euro, so a loan in another currency adds exchange-rate risk to every payment.

Why does a hotel loan cost more than a housing loan? Because the bank takes business risk, needs more monitoring, and in a default it would have to take over a business, not just a flat.

A worked example: the lower of two limits

Suppose a hotel has an NOI of 500,000 euro a year. These numbers are our own illustration, not an offer.

• DSCR limit: at a DSCR of 1.40 the yearly debt service may not exceed about 357,000 euro. With a 5% interest rate and a 20-year repayment schedule, that supports a loan of about 4.45 million euro.
• LTV limit: if the market values the hotel at a 6.5% yield on NOI, the value is about 7.7 million euro, and 60% of it is about 4.6 million euro.

The lender would offer the smaller figure, about 4.45 million euro, which is roughly 58% of the value. If NOI turns out lower once the bank's own analyst has adjusted your seller's accounts, the loan shrinks fast: a weaker hotel can be refused at the DSCR test even when the LTV looks comfortable. Use this logic to check any price the seller quotes.

How much equity you need

Plan for the price, the acquisition taxes, the first renovation and working capital. A buyer should treat an equity share of 35% to 45% of the total cost as a planning figure, and more for a smaller or weaker hotel. This is an indicative figure of ours, not a bank rule.

For orientation, the public figures we found are about housing loans for non-residents: in Greece a deposit of 30% to 40% is typical, in Spain 30% to 50%, in Croatia 40% to 50% for buyers from outside the EU and 20% to 30% for EU and EEA citizens. A hotel buyer should not expect to put in less than that. A Polish buyer is an EU citizen and does not face the extra non-EU requirements in Croatia, but the bank still treats a non-resident as a higher risk.

What a bank checks about a foreign buyer

Lenders ask the same questions in every country, in this order:

• Source of funds and anti-money-laundering checks: where the equity comes from, with documents, and a clear link between the account that pays and the buyer. See sending money abroad for a property purchase from Poland.
• The buyer's structure: most banks lend to a special purpose company (SPV) that owns the hotel and ask for guarantees from the owners. We cover the structure in holding structures and taxes for hotel owners.
• Experience: who will run the hotel, and what is their record. A first-time buyer with no operator is the hardest case.
• The asset: an independent valuation by an approved valuer, title, licences and classification, planning and fire approvals, energy performance, insurance, and technical condition.
• The business plan: three to five years of accounts, forecasts, and a realistic plan for the renovation budget.
• The operating contract: a management agreement or lease, and whether the bank can step in if the operator fails. See how to choose a hotel operator and read the contract.

Covenants you will be asked to accept

A hotel loan agreement is more than an interest rate. Typical conditions are:

• Financial tests: minimum DSCR or interest cover and maximum LTV, checked once or twice a year. A breach can trigger extra equity or early repayment.
• A reserve for furniture and equipment, often set as a share of revenue and held in a controlled account.
• A lock-up on distributions: you cannot pay yourself dividends if the tests fail.
• Control over the operator: the bank's consent is needed to change the operator, the brand or the lease.
• Insurance, regular reporting, and sometimes a requirement to hedge the interest rate.
• Cross-default: a problem in one of your companies can put the loan in default.

Read these before you pay a deposit, because they decide how much room you have in a bad season.

Alternatives and additions to a bank loan

• Seller financing: the seller leaves part of the price as a deferred payment or a loan. It is a sign of confidence in the business and helps when the bank offers less than you need, but it is behind the bank and has its own terms.
• Mezzanine debt: a loan that ranks behind the bank and costs more. It exists mainly in larger deals and lifts the total leverage at a price; we do not quote figures because none were confirmed.
• A co-investor: a partner brings equity and shares the profit and the risk.
• Buying in stages, or choosing a smaller hotel that fits your own equity, is often wiser than stretching the loan.

Who this is for, and who should not

Hotel financing suits a buyer who can put in a large share of the price in cash, has a credible operator, and accepts conditions that limit how the business is run. It does not suit a buyer who counts on a loan for almost the whole price, who has no operating partner, or who plans to repay the loan from a promised income of someone else. If a seller or promoter guarantees income or occupancy, treat it as a reason to check the contract, not as a reason to borrow more. Read how to check units sold with rental pools and yield promises.

A short checklist before you ask a bank

• Three to five years of audited or at least accountant-signed accounts of the hotel.
• Your own total budget: price, taxes, renovation, working capital, fees.
• The operating contract and the operator's references.
• An independent valuation and a technical survey.
• A structure and a source of funds that the bank's compliance team can follow.
• A clear picture of the exit: who will buy this hotel from you. See exiting a hotel investment.

FAQ

Can a Polish citizen get a hotel loan abroad? Yes in principle, but the lender will treat you as a non-resident and ask for more equity, documents and guarantees than for a local buyer.

Is a bigger loan always better? No. A higher loan raises the risk in a weak season, and the covenants can take control away from you.

Can the loan be repaid from the hotel's income only? Banks size it that way, but the first years with renovation and ramp-up are the risk; keep a cash buffer.

How we help

We help you check, compare and negotiate: we build a realistic cost and equity plan, review the lender's conditions and the operating contract with local counsel, and look at the structure with your tax adviser. You can browse the hotels in our catalogue to see what is on the market now; we do not promise financing or any return.

This article is informational only and is not legal, tax or investment advice. Figures are indicative, come from market and professional sources and change over time; confirm current terms with a bank and local counsel before you buy.