The Quick Read: A founder qualifies the tower unit on its rent, then fits the request under two ceilings at once: the non-warrantable condo cap of 75% leverage and $1,500,000, and the size ladder that governs bigger balances. Anything above the condo cap is reviewed case by case, subject to underwriting. Every figure here varies by lender and program.
- Non-warrantable is a label for how a building fails standard condo screens. It does not make the unit unfinanceable on rent-based programs.
- Two limits apply together. The lower one wins.
- Association dues sit inside the monthly obligation, so a luxury tower’s dues can decide the coverage number.
- Some building problems, such as unfinished construction or developer control, stop nearly every lender. Others only cap leverage.
Key Terms Defined
Non-warrantable condo: a condo project that fails the screens used to sell loans into the agency market. Common causes are heavy investor ownership, one entity owning too many units, litigation, weak reserves, or hotel-style features.
Super jumbo: lender shorthand for balances well above standard tiers. No regulator defines it. In our network the ladder above $3,000,000 is where super jumbo rules begin.
DSCR (debt service coverage ratio): monthly rent divided by the full monthly obligation. That obligation is principal, interest, taxes, insurance, and association dues. A result of 1.00 means rent covers the payment.
PITIA: the full obligation just described, with the A standing for association dues. On interest-only loans, lenders test on ITIA, which drops the principal.
Condo questionnaire: a form the lender sends to the condo association. The answers show ownership mix, litigation, delinquencies, reserves, and commercial space.
Reserves: liquid cash left after closing, counted in months of the full obligation.
DSCR 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 own rent or nightly figures, taxes, insurance, and HOA for a more accurate picture.
Program parameters update from Lendmire’s centralized guideline source. Taxes and insurance are editable estimates.
As of Oct 15, 2026 · General Freddie Mac market benchmark, not a Lendmire loan offer. Rent, nightly rate, occupancy, taxes, and insurance are editable estimates. Short-term rental figures are estimates only and vary significantly by season, property type, management approach, and local short-term-rental rules — confirm local regulations before relying on them. 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.
Why Would a Founder Choose Rent-Based Financing on a Tower?
Because a founder’s income often does not look like a salary. A sale, a distribution, or a lumpy year can leave a thin tax return next to a very large net worth. DSCR loans for investment property qualify primarily on property-level rental income covering the payment, subject to lender guidelines. That fits this borrower.
The loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. Lendmire’s complete DSCR loans guide covers the basics for readers new to the product.
Rent-based does not mean easy. Credit, reserves, housing history, and appraisals all tighten as balances grow. Vesting in an LLC is common, subject to program terms, and layered entities are not accepted.
What Makes a Tower Non-Warrantable?
Most towers fail for one of a handful of reasons, and the reason matters more than the label. Across our wholesale network, we sort them by whether a rent-based lender can work around them.
| Trigger | Why it matters | Can a DSCR lender work around it? |
|---|---|---|
| Heavy investor ownership | Fails agency screens only | Usually yes |
| One owner holds many units | Concentration risk | Sometimes, by lender |
| Active litigation | Depends on the dispute | Sometimes, by claim type |
| Weak reserves, special assessments | Cost risk to owners | Sometimes, if improving |
| Delinquent dues | Signals building stress | Sometimes, if improving |
| Developer still in control | Affects every lender | No, until control transfers |
| No certificate of occupancy | Unit cannot be rented | No, until issued |
| Hotel or rental-pool structure | Condotel track | Yes, on tighter terms |
Here is the agency context, kept brief. Fannie Mae’s lender letter on condo project standards retired the 50% investment-concentration limit for established projects under full review on investor loans. It kept the presale rule, which requires at least 50% of units to be conveyed or under contract to primary-residence or second-home buyers. A Michigan community-association law blog notes that individual lenders may keep their own concentration rules. It also notes that single-investor limits remain: no more than 2 units in projects of 5 to 20 units, and 20% in projects of 21 or more.
The practical result: a tower that is non-warrantable today usually fails on something other than the investor mix. Think single-entity ownership, commercial space, litigation, insurance, reserves, or delinquencies.
Two failures are different in kind. Active construction and developer control of the association hit every lender, DSCR included. Treat those as timing problems, not leverage problems. The unit must also be rent-ready.
Does the Project’s Health Matter If the Loan Runs on Rent?
Yes, but not through the agency label. No agency is buying the loan, so the agency verdict does not decide eligibility. The lender’s own overlays do. Those include the condo cap, documentation of the association’s condition, and the appraiser’s view of marketability. A tower with real litigation, deferred repairs, or a thin reserve fund can still lose leverage or get declined.
How Do the Condo Cap and the Size Ladder Interact?
The lowest ceiling wins. On non-warrantable condos, the cap is 75% leverage and a $1,500,000 loan amount. The size ladder sets its own leverage by balance. Both apply at once, through select wholesale programs, subject to underwriting. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
| Loan size | Ladder leverage (purchase) | Non-warrantable condo |
|---|---|---|
| $150K to $1M | 80% | Capped at 75% |
| $1M to $1.5M | 75% | 75% cap matches |
| $1.5M to $2M | 75% | Above the condo cap |
| $2M to $3M | 75% | Above the condo cap |
| $3M to $4M | 65% | Above the condo cap |
| $4M to $6M | 60%, on review | Above the condo cap |
| $6M to $10M | 60%, on review | Above the condo cap |
Read the lower rows carefully. The condo cap tops out at $1,500,000. A request above that on a non-warrantable tower sits outside the standard ladder. It gets reviewed case by case before submission. We do not know of a stacked product that pairs super jumbo balances with non-warrantable status at full ladder leverage, so do not plan around one. Lendmire’s piece Can a Tower Condo Buyer Use a Super Jumbo DSCR on a Non-Warrantable Unit? takes the buyer’s side of the same question.
The top leverage in each band needs a matching score: about 660 or better in the first band, 700 in the second, 720 from $1.5 million to $3 million, and 700 again above that. These are what the top cell needs, not the program floor. The program floor is 660 on loans to $3,000,000 and 700 above $3,000,000, which is the super jumbo overlay. A lower score generally means a lower leverage cell inside the same band.
For cash-out, the ladder offers 75% to $1,000,000, 70% to $1,500,000, and 60% to $3,000,000, with none above that.
So if the plan is a big balance, the honest first question is which building you buy. A warrantable tower can use the full ladder. A non-warrantable one narrows the options fast.
The Closing Sequence, Step by Step
Order matters here. Do the building diligence before you fall in love with the unit.
1. Find out why the tower is non-warrantable. Ask the listing side or the association. A fixable document gap is a different file from a safety, insurance, or control problem. Condotel and timeshare structures are the hardest.
2. Request the condo questionnaire before you make an offer. If the association will not complete it, treat that as a warning sign.
3. Gather the project documents. You want the operating budget, financial statements, reserve study, master insurance certificate, meeting minutes, litigation disclosures, special-assessment notices, engineering reports, and any rental restrictions.
4. Run the coverage math with dues included. Do this before you commit. The worked example below shows how.
5. Pick the structure. Choose purchase or rate-and-term. Choose full amortization or interest-only. Choose the vesting.
6. Order appraisals. Two are required above $2,000,000. Towers are hard to appraise, since floor, view, and comparable sales swing values.
7. Assemble the borrower file. That means credit, entity documents, guaranty, and proof of reserves.
8. Fund the reserves from other money. Cash-out proceeds never satisfy reserves.
9. Sign and fund. Lenders review and approve. Lendmire arranges the file through its wholesale network and is a broker, not the lender.
How to Read a Bad Questionnaire
A bad answer is not always a dead file. Here is how we triage them.
Delinquent dues and thin reserves may improve over time. Ask whether the association has a plan. A single-entity concentration might clear with a lender that accepts it, or it might be a flat no. Check whether investor concentration is the only problem. If it is, rent-based programs may still work, according to one BiggerPockets thread on buying a non-warrantable condo.
Litigation is the most variable. A dispute over a minor vendor matter reads differently from one about structure, safety, habitability, or title. Lenders weigh the nature of the claim, the amount at risk, and insurance coverage.
Status can also change. If litigation settles or reserves improve, a project can regain warrantable status. That matters for your exit as much as your entry.
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.
A Worked Ratio Example
Every figure below is a modeled assumption, not market data. It shows how dues move the number.
Say a tower unit’s rent covers principal, interest, taxes, and insurance at 1.20x. That looks fine. Now add association dues. In this model, dues equal about 18% of the loan payment. Coverage falls to roughly 1.02x. The unit still clears 1.00, but barely.
Now suppose the founder chooses interest-only. Dropping principal cuts the loan payment by about a fifth in this model, and coverage rises to roughly 1.23x. Interest-only runs 120 months on 30- and 40-year terms, to 75% leverage, qualified on ITIA, subject to underwriting. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Two lessons follow. Luxury dues weigh heavily on the ratio, and the structure you pick can fix a thin number. Coverage of 1.00 or higher is what earns full ladder leverage, so a result that lands at 1.02x once dues are counted leaves almost no cushion. Put the dues in the math before you commit.
Entity, Guaranty, and Reserves
Founders usually want the unit in an LLC, subject to program terms. Expect a personal guaranty. Trust vesting is a separate question that depends on the program.
Reserves are six months of PITIA on the subject property, and twelve for first-time investors. On interest-only loans, that is ITIA. Our network adds no extra reserves for other financed properties, and a borrower can have up to 20.
Above $3,000,000, the overlay adds more. Expect 0x30x24 housing history, 48 months of seasoning after a credit event, and citizens or permanent residents only. Rural property is excluded. If you are choosing between a bigger loan and a cleaner file, the cleaner file usually wins.
Short-term rentals add a separate track. Income is based on documented operating history or the appraisal’s rent analysis, at 80% of gross, with loans to $2,000,000. Short-term rental rules can vary by city, county, HOA, and property type, so investors should confirm local rules before relying on projected rental income. Many towers restrict rentals outright.
Where the General Rule Breaks
Condotels and hotel-style rental programs. These get their own tighter terms: 75% on a purchase, 65% on a refinance, a $1,500,000 cap, and $250,000 cash-in-hand. They are meant for experienced investors.
Cash-out on a big balance. Proceeds are unlimited at or below 60% leverage and capped at $1,500,000 above 60%. There is no cash-out above $3,000,000. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Projects under development. Unfinished construction and developer control affect everyone. No leverage trick fixes them.
Resale. A thinner buyer pool can drag resale value, which investors raise often in discussions on condo financing pitfalls. Plan the exit before you buy. Reference point: the conforming one-unit limit is $832,750, with a high-cost ceiling of $1,249,125, but DSCR loans are non-agency, so that figure is only a yardstick.
When This Is the Wrong Tool
Sometimes the better move is a different loan or a different building.
| Situation | Better path |
|---|---|
| Balance far above the condo cap | Warrantable tower, or a different property |
| Rent too thin after dues | Lower leverage, interest-only, or another route |
| Founder income is strong and documented | Full-doc loan |
| Rent does not drive the story | Bank statement route |
This is a strategy call, not a formality. An honest broker will tell you when a different building fixes the problem. In many files, buying a warrantable unit down the street beats fighting a hard-to-finance tower.
Closing Checklist
Before you offer on a tower, confirm these items:
- The reason the building is non-warrantable, in writing.
- A completed condo questionnaire.
- Dues, assessments, and insurance, all inside the coverage math.
- Which ceiling binds: the condo cap or the size ladder.
- Reserves in hand, from funds other than cash-out.
- Two appraisals, if the balance is above $2,000,000.
- An exit plan that survives a thinner buyer pool.
Frequently Asked Questions
Can I close a non-warrantable tower loan in an LLC?
Often yes, subject to program terms. Entity vesting is welcome, but layered entities are not. Expect a personal guaranty, and confirm vesting before you sign a contract.
Does the investor ratio in the building still matter?
It matters less than it used to. The agency’s blanket 50% concentration limit was retired for established projects on investor loans, per Fannie Mae’s lender letter. Single-entity limits and lender overlays still apply, and so do the other triggers.
Does litigation kill the deal?
Not automatically. Lenders weigh the claim’s nature, the amount at risk, and insurance. Safety, structural, habitability, and title suits are the most damaging. Each file is underwritten individually.
Can reserves come from the loan proceeds?
No. Cash-out proceeds never satisfy reserves. Six months of PITIA is typical on the subject property, and twelve for first-time investors. Those funds must come from elsewhere.
Is there a super jumbo loan above $1,500,000 on a non-warrantable condo?
Not as a standard product. The condo cap sits at $1,500,000 and 75%. Larger requests are reviewed case by case and are not assured. A warrantable building opens the full ladder.
Next Step
If you are buying or refinancing a high-balance rental property and want to see how the numbers work, Lendmire can help you compare super jumbo DSCR loan options based on the property income, the loan balance, credit profile, leverage, and investor goals. Reach the team at 828-256-2183.
Founders who would rather qualify on deposits than on rent can read Lendmire’s piece How to Close a Super Jumbo Bank Statement Loan on a Non-Warrantable Tower.
Lendmire’s self-employed mortgages page presents both super jumbo programs, bank statement and DSCR, side by side.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker that arranges business-purpose DSCR investor loans through select lenders in its wholesale network, across 41 markets, including Washington, D.C. It is not a lender. Programs change, every file is underwritten individually, and nothing here is a commitment to lend. Tax treatment varies; consult a qualified professional. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae lender letter on condo project standards
2. Michigan Community Association Law Blog
3. BiggerPockets thread on buying a non-warrantable condo
4. BiggerPockets thread on condo financing pitfalls
5. Consumer Finance Monitor on conforming loan limits
This article is part of Lendmire’s super jumbo DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Document a Super Jumbo DSCR Loan as a Founder After a Company Sale · How to Qualify for a Super Jumbo DSCR Loan in Michigan · Can a Non-Warrantable Luxury Tower Buyer Get a Super Jumbo DSCR 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.