The Quick Read: A DSCR lender replaces the missing booking history with a third-party revenue estimate, trims that estimate by a lender-set haircut, divides the result by the full monthly housing obligation including condo dues, and the condo qualifies primarily on that property-level ratio, subject to lender guidelines. The haircut and the income source explain why two lenders can show different coverage on the same unit.
- The projection is an estimate for your exact unit, built from nearby comparable listings. It is not a guarantee.
- The lender discounts it before using it, and the size of that discount varies by program.
- Condo dues sit in the denominator, so a dues increase pulls coverage down.
- The HOA’s rules decide whether short-term income counts at all. Check them first.
- Clearing 1.00 is not the same as making money. Repairs, vacancy, and management sit outside the ratio.
Here is the plain version. You are buying a condo downtown, and it has never been an Airbnb under your name. There is no host history to show a lender. So the lender needs a stand-in for income, and the projection is that stand-in.
Short-Term Rental Calculator
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Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Oct 15, 2026
Prefilled with starting assumptions — enter your nightly rate, occupancy, taxes, and insurance for a more accurate picture.
Short-term rental income is documented with a 12-month history or a market data report. Program parameters update from Lendmire’s centralized guideline source.
As of Oct 15, 2026 · General Freddie Mac market benchmark, not a Lendmire loan offer. Nightly rate, occupancy, taxes, and insurance are editable estimates. Qualifying income for short-term rentals varies by program — some use appraisal market rent, others use documented STR history or projections — and is confirmed in underwriting. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
What a Lender Means by a Projection
A projection is a modeled revenue figure for a specific address, built from how the most similar nearby listings have performed. The usual tool is AirDNA’s Rentalizer, which estimates revenue, average daily rate, and occupancy from nearby comps.
Each report also carries a Comp Set Strength score of Low, Medium, or High. AirDNA’s calculator page says the score reflects how many similar properties sit near the address, how closely they match on bedrooms, baths, and guest count, and how tightly their revenue clusters. A Low score does not mean the data is wrong. It means the comps vary and deserve a closer read.
Dense urban markets tend to give a condo stronger comp data than a remote property gets. More listings, more matches. That helps, though it does not make the number a promise.
Across the wholesale network Lendmire works through, the projection is one of several ways to evidence short-term income. Others include a 12-month property-manager statement, 12 months of platform or bank deposits, an appraiser’s short-term rental analysis, and the appraiser’s long-term market rent schedule. The last one is Form 1007 for a condo unit. Programs differ on which they accept at purchase and which they treat as a floor, a fallback, or a cross-check. For a deeper look at what lenders accept as evidence, see Lendmire’s piece What Counts As Short Term Rental Income For A Lender?.
Key Terms Defined
Projection: A modeled estimate of what a specific unit could earn as a short-term rental, based on nearby comparable listings.
Qualifying income: The monthly figure the lender actually divides by the payment, after any haircut on the projection.
Haircut: The percentage reduction a lender applies to the projection before using it. It varies by lender and program.
PITIA: Principal, interest, taxes, insurance, and association dues. It is the full monthly housing obligation the ratio is measured against.
DSCR (debt service coverage ratio): Qualifying monthly income divided by PITIA. At 1.00, the income equals the obligation.
Non-warrantable condo: A condo project that falls outside the standard agency eligibility checklist. In investor lending, many programs still finance these, usually with adjusted leverage or loan size.
Condotel: A condo project run with hotel-style features, such as a rental pool, front desk, or daily housekeeping. It is a harder block than ordinary non-warrantable status.
Step by Step: How the Number Gets Built
The sequence is the same on most files, even when the details change by program.
1. Classify the building. The lender decides whether the project is warrantable, non-warrantable, or a condotel. The condo questionnaire from the HOA settles this, so order it early.
2. Confirm the HOA permits short-term rentals. This is a gate, and it comes before any math.
3. Pull the projection for the exact unit. Bedrooms, baths, guest capacity, and building type all feed the model. Review the comp set, not just the headline total.
4. Apply the lender’s haircut. The gross annual projection is reduced, then divided by 12 to get a monthly qualifying income.
5. Divide by PITIA, including dues. That produces the coverage ratio.
6. Order the appraisal. The rent schedule is typically still ordered. Depending on the program it works as a floor, a fallback, or a cross-check.
7. Verify local licensing and any rental addendum the lender requires.
Step four is where files diverge. Some programs use only platform statements averaged over a long window. Others accept a projection at purchase. Some default to the long-term rent schedule. A lender that relies only on the 1007 cannot capture what an Airbnb unit might earn, which is why the program choice matters as much as the property.
Check the Building Before You Check the Projection
The HOA declaration is a private recorded contract, and it operates independently of the city. An HOA can ban short-term rentals even where the city allows them, as GoverningDocs explains in its CC&R overview. City-level permission never overrides a building’s own rules.
Hotel-like features are the other trigger. Pooling, front-desk or registration services, daily cleaning, or hotel management can make a project a condotel. Advertised nightly rates alone do not. Across our network, mandatory rental pools and time-share structures are harder blocks than plain non-warrantable status.
Other building-level flags show up in the questionnaire: heavy investor concentration, thin reserves, litigation, and a high share of units used as short-term rentals. Any of these can change leverage or loan size. Fines levied by an HOA can also become liens, and liens can block a refinance later.
Read the building’s rental rules and HOA questionnaire before you sign a contract, and before you pay for an appraisal. A beautiful projection on a unit that cannot legally host short stays is worth nothing.
What Moves an Urban Condo Projection
Inputs change the output, and a thin or mismatched comp set weakens the whole number.
| Input | Why it matters | How a lender may react |
|---|---|---|
| Bedroom and bath count | Sets which comps apply | Mismatched comps get questioned |
| Guest capacity | Drives rate and occupancy | Overstated capacity gets trimmed |
| Building type and amenities | Shifts the comp pool | Hotel-style features raise eligibility flags |
| Comp Set Strength | Shows how tightly comps agree | Low score invites a harder review |
| Cleaning fees in revenue | Can inflate the per-night picture | Appraiser may rebuild the figure |
On that last row: 10xBNB’s AirDNA review notes that the tool folds cleaning fees into total revenue. It also notes the data refreshes monthly, so it can run up to a month behind. Neither is fatal. Both are reasons the lender does not treat the raw total as the final word.
A Worked Example in Ratios Only
Treat everything below as modeled assumptions, not market data. Picture a one-bedroom downtown condo with a mid-strength comp set, and assume its raw projection covers PITIA about 1.40 times.
- Light haircut: coverage lands in the low 1.1s. Comfortably over 1.00.
- Heavier haircut: coverage drops to just under 1.00. Same unit, same payment, different lender.
- Light haircut, dues rise: say a dues increase lifts PITIA by about a tenth. Coverage slides from roughly 1.12 to about 1.02. Still over the line, barely.
The property did not change in those three lines. The lender’s factor and the dues did. That is the whole lesson of the denominator: condo dues are a fixed cost that rental income has to cover first.
Now the sub-1.00 case. Most select programs we place files with start at 1.00, and a separate select-lender path takes coverage below 1.00 with leverage and terms adjusted. If the heavier-haircut result above lands under the line, the options a lender would review include that sub-1.00 path, an interest-only period, or a different income source such as a manager statement. Qualification stays subject to lender guidelines, credit approval, and property review.
How Accurate Is the Projection, Honestly?
On the cautious side, VaultSTR’s Rentalizer review argues the tool runs 15 to 30 percent optimistic and suggests underwriting the first year at 60 to 75 percent of the projection. That is one analytics firm’s opinion, not a lender rule. Treat it as a stress-test input.
On the other side, a host in a BiggerPockets thread found the tool under-projected their own results: 67% occupancy projected against 76% actual. A lender in the same thread said it compares actuals to AirDNA and sometimes finds them scarily accurate. Both are single anecdotes.
The honest takeaway is that market-level accuracy and property-level accuracy are different things. A projection for one unit is an estimate resting on other estimates. That is exactly why lenders haircut it.
Run your own conservative case before the lender does.
DSCR vs. conventional financing
There are two common ways to finance an investment property, and they qualify you differently — here’s how investors weigh them.
Why investors choose it
- Qualifies on the property’s rental income — no personal tax returns, W-2s, or pay stubs needed to document income.
- No personal debt-to-income ceiling to clear, so existing mortgages and obligations don’t cap your borrowing the same way.
- Can be closed in an LLC, keeping the property inside a business entity.
- Built for scaling — not held to the limit on number of financed properties that conventional financing applies.
- Underwriting centers on the deal: generally qualifies when the rent covers the payment, a 1.00x coverage ratio being a common baseline (confirmed in underwriting).
- Designed specifically for investment property, including long-term and, where the program allows, short-term rentals.
Where it’s strong
- Often the lowest ongoing financing cost for a buyer who fully qualifies on personal income — a fit for a first property or a cost-first purchase.
Trade-offs for investors
- Requires full personal income documentation and must fit within a debt-to-income limit — salary, existing debts, and other mortgages all count.
- Typically held in your personal name rather than a business entity.
- Caps how many financed properties you can carry, which can become a ceiling as a portfolio grows.
- Evaluates you as a borrower as much as the property, which usually means more paperwork.
How investors usually choose: a first or single property often optimizes for the lowest financing cost; portfolio builders often optimize for leverage, vesting in an LLC, and scaling past conventional caps. The right answer depends on your goals, the property, and current guidelines — both paths run through select lenders in Lendmire’s wholesale network, with eligibility and terms confirmed in underwriting.
Reading a Projection Before You Trust It
Four checks catch most problems.
- Look at the comps, not the total. Are they the same bedroom count and similar guest capacity? A studio comp inside a two-bedroom projection inflates the result.
- Check amenity tier. A unit without the building’s pool or parking should not borrow numbers from listings that have them.
- Watch the comp count. A thin set in a small submarket carries more error.
- Compare to the long-term rent schedule. If the projection is several times the long-term rent, expect questions. A large gap is not disqualifying, but it invites scrutiny.
An appraiser’s view can override the tool. When it does, the lender follows the more conservative figure on most programs.
Which Income Counts in Which Situation
| Situation | Typical evidence | Common treatment |
|---|---|---|
| Purchase, no history | Third-party projection | Haircut applied, then ratio |
| Refinance with history | Trailing statements or deposits | Actuals usually carry weight |
| Unit switching from long-term | Lease plus projection | Program decides which governs |
| Building restricts STR | Long-term rent schedule only | Short-term income does not count |
A projection-based file avoids the need for a track record on the property. A trailing history can later support a different treatment, but program-specific rules apply.
Where the General Rule Breaks
Vendor guidelines versus lender floors. AirDNA’s financing guide cites 1.25 or higher as a typical coverage target. That is a data vendor’s general guideline, not a lender floor. On short-term rental purchases, select programs in our network start at 1.00, and the same 1.00 applies on a refinance, with stronger ratios opening better pricing and leverage.
Host experience. Short-term rental files typically expect about 12 months of landlord or host experience from the borrower. A projection stands in for the property’s history. It does not replace that expectation. First-time hosts should ask early which programs flex on it.
Leverage and credit. On short-term rental collateral, leverage tops out at 75% LTV on a purchase and about 70% on a refinance or cash-out, with a 640 minimum score as the usual starting point. A non-warrantable building can pull leverage lower. Loan sizes go up to $3,000,000 on standard programs, subject to lender guidelines.
Ineligible property. Manufactured homes, log homes, and barndominiums are not offered through these programs. A condo is fine on property type. The building still has to pass.
The cash-flow trap. The ratio compares income to PITIA only. Vacancy, repairs, utilities, management, furniture, and capex sit outside it. A file can clear 1.00 and still lose money monthly. Tax treatment varies; consult a qualified professional.
Seasonality in a City Unit
Urban condos tend to have event-driven spikes and shoulder-season dips rather than one long beach-style peak. The lender uses an annualized figure, not your best month. If your pro forma leans on conference weeks or a single festival, the annual number will already have averaged those in, and the haircut then trims it further. Underwrite the average, and treat peaks as upside.
Document Checklist for an Urban Condo File
- The projection report for the exact unit, with the comp set visible
- The HOA declaration, rules, and the completed condo questionnaire
- Written confirmation that short-term rental is permitted in the building
- Current dues and any pending special assessment notices
- Local licensing or registration paperwork, if required
- Proof of host or landlord experience
- Any manager statements or platform history on comparable units you operate
What the Decision Looks Like in Practice
Start with the building. If the HOA permits stays and the project is not a condotel, move on to the income side. Pull the projection, test it at a heavier haircut than you expect, and add dues to the denominator. If it still clears with room, the unit is worth the appraisal fee. If it only clears at the lightest haircut, pick the program deliberately, or plan to bring more equity.
A larger down payment lowers the monthly obligation and can lift coverage. It never erases leverage caps, credit floors, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage. For the wider picture of how these loans work, see Lendmire’s complete DSCR loans guide.
Frequently Asked Questions
Does a lender use the AirDNA number as-is?
No. Lenders typically reduce the projection by a factor before dividing by PITIA. The size of that haircut varies by lender and program, which is why identical properties show different ratios.
Can a condo qualify if the HOA bans short-term rentals?
Short-term income will not count in that building. The lender falls back on the long-term rent schedule, and the ratio is judged on that figure alone.
Does non-warrantable mean no DSCR loan?
No. Many investor programs finance non-warrantable condo projects, usually with adjusted leverage or loan size. Condotel features and mandatory rental pools are harder blocks.
Is a passing ratio the same as positive cash flow?
No. The ratio compares rent to PITIA only. Operating costs sit outside it, so run your own expense budget separately.
What if the projection supports the loan but long-term rent does not?
Programs that accept a projection at purchase may still approve the file. Stress-test both numbers anyway, because your fallback matters if bookings come in soft.
Next Step
If you are buying or refinancing a rental property and want to see how the numbers work, Lendmire, a mortgage broker arranging DSCR financing through select lenders across 41 markets including Washington, D.C., can help you compare DSCR loan options based on the property income, credit profile, leverage, and investor goals. Call 828-256-2183 or request a quote at Lendmire’s quote page. Programs change, and every file is underwritten individually; this is not a commitment to lend.
For current guidelines and terms, see Lendmire’s DSCR loan programs page.
About Lendmire
Lendmire, NMLS# 2371349, is a non-QM mortgage broker serving real estate investors in 41 markets, including Washington, D.C., through DSCR investor loan programs. Qualification is generally reviewed around the subject property’s rental income, not the borrower’s W-2 history — a practical fit for LLC-titled portfolios and self-employed investors. All scenarios remain subject to lender review and program guidelines. Two consecutive Scotsman Guide Top Mortgage Workplace recognitions (2025, 2026).
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References
3. GoverningDocs CC&R explainer
6. BiggerPockets forum: AirDNA accuracy
7. AirDNA: how to finance your vacation rental
This article is part of Lendmire’s short-term rental loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: 12-Month vs One Booking DSCR When Converting a Rental to Airbnb · How to Document Airbnb Income for a DSCR or Conventional Lender · Preemption States vs Enforcement States for a DSCR Airbnb Loan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.