The Quick Read: Warrantability is an agency label, and agency rules do not govern a DSCR loan. The network’s own condo overlays do, and they are tightest where short-term rentals, condotel features and large loan size meet. Typically, a non-warrantable or condotel unit tops out at $1,500,000, short-term-rental income stops counting above $2,000,000, and the super jumbo ladder starts past $3,000,000. Those caps collide, subject to underwriting.
- Non-warrantable is a financing label for the building’s paperwork, not a defect in the unit.
- A non-warrantable condo reaches 75% leverage and $1,500,000 on most files.
- Condotels carry the same $1,500,000 cap, with 75% on a purchase and 65% on a refinance.
- Short-term-rental files need coverage of 1.00 or higher and stop at $2,000,000.
- A $3,000,000+ condo with STR income and non-warrantable features generally falls outside the published paths.
Key Terms Defined
Warrantable condo: a building that meets the project tests set by the big mortgage agencies, so those agencies will buy loans on its units.
Non-warrantable condo: a building that fails one or more of those tests. It is still a real, sellable building. It just needs a lender outside the agency system.
Condotel: a condo project that runs like a hotel, with front-desk services, rental pooling or revenue sharing.
Super jumbo: a loan size above the conforming limit and above the line a lender sets itself. No regulator defines it. For context, the conforming baseline for a one-unit home is $832,750 per NAHB, and the high-cost ceiling is $1,249,125.
PITIA: principal, interest, taxes, insurance and association dues. The coverage ratio divides rent by this monthly total.
DSCR (debt service coverage ratio): the property’s rent divided by that monthly obligation. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines.
Short-Term Rental Calculator
Run the STR numbers in your market
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.
Why the Agency Label Matters Less for DSCR (and Where It Still Bites)
Agency rules shape the vocabulary, not the decision. DSCR loans are designed for non-owner-occupied investment properties, and because they are business-purpose loans, they are reviewed differently from a standard owner-occupied mortgage.
Still, the agency tests are a handy checklist for what any lender worries about. Fannie Mae’s guide on ineligible projects treats hotel-type operations, “primarily transient” use, and voluntary rental pooling or revenue sharing as disqualifying. Freddie Mac’s guide likewise lists condominium hotels and similar transient housing as ineligible. It cannot finance projects that operate as hotels or manage short-term rentals, even when units are individually owned.
That is why most STR-heavy buildings end up non-warrantable. It pushes operators toward non-QM and portfolio lenders. Across a wholesale network, that is exactly where these files live.
Is an STR-Friendly Building Automatically a Condotel?
No. Fannie Mae’s condo FAQ defines “primarily transient” as predominant use of units for short-term rentals rather than longer-term occupancy. A building where owners live there much of the year and rent seasonally, with no other hotel traits, does not meet that test.
So you have three buckets, and the lender pool narrows at each step.
| Factor | Standard condo | Non-warrantable | Condotel |
|---|---|---|---|
| Lender pool | Widest | Narrower | Narrowest |
| Typical cap in the network | Ladder applies | 75% and $1,500,000 | $1,500,000 |
| Purchase / refinance leverage | Per ladder | Up to 75% | 75% / 65% |
| Review style | Standard | Adjusted terms | Case by case |
Condotels also carry $250,000 cash-in-hand. Every figure is a ceiling through select wholesale programs, subject to underwriting.
Voluntary rental programs are not a safe harbor. The agency tests treat revenue sharing as a hotel trait even when owners opt in. Mandatory pools and timeshare structures are harder blocks than a high investor ratio, which many DSCR lenders will weigh against other strengths.
How Does a DSCR Lender Actually Review the Building?
Step by step, a file moves like this.
1. Classify the project, not just the unit. The lender reviews a condo questionnaire and the HOA documents. It checks investor concentration, single-entity ownership, delinquent dues, litigation, reserves, insurance and commercial space.
2. Sort the building into a bucket. Standard, non-warrantable or condotel, as in the table above.
3. Confirm STR is allowed. The HOA documents must permit the planned rental term. A ban at that term is a clear stop. Municipal permission to operate is documented for the specific property, and 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.
4. Order the appraisal. Condo value uses Form 1073. Rent uses Form 1007 for a single-family home or Form 1025 for two to four units. Those are agency templates borrowed for DSCR files. They do not bring agency rules with them.
5. Run the coverage test. Rent divided by PITIA, with association dues inside the denominator. Luxury-building dues are large, so they compress coverage directly.
6. Apply size overlays. Leverage steps down, credit requirements rise and two appraisals apply above $2,000,000.
Warrantability is tested at each application. A building can flip with a new lawsuit or a spike in delinquencies, so a clean status on a past deal tells you little.
Where Loan Size Changes the Answer
This is the part most operators misjudge. The loan bands below are loan amounts, not purchase prices. Multiply price by leverage first, then read the band.
| Loan band | Purchase | Rate-term | Cash-out |
|---|---|---|---|
| $150K–$1M | 80% | 80% | 75% |
| $1M–$1.5M | 75% | 75% | 70% |
| $1.5M–$2M | 75% | 75% | 60% |
| $2M–$3M | 75% | 75% | 60% |
| $3M–$4M | 65% | 65% | — |
| $4M–$6M | 60% on review | 60% on review | — |
| $6M–$10M | 60% on review | 60% on review | — |
All figures assume coverage of 1.00 or higher and are ceilings, subject to underwriting. The top cell in the first band needs credit of 660 or better. The $1,000,000 to $1,500,000 band needs 700 or better for its top leverage, and the next two bands need 720. Above $3,000,000 the program floor is 700 and the file reaches 700 for its top leverage. Above $4,000,000 every request is reviewed case by case before submission.
Now stack the condo caps on top. A non-warrantable or condotel unit stops at $1,500,000. STR income qualification stops at $2,000,000. The super jumbo ladder starts past $3,000,000. A $3,000,000+ condo with STR income and non-warrantable features therefore generally falls outside the published paths, subject to underwriting. Two things can still work: a smaller loan against the same building, or a long-term-rent underwriting of the property instead of STR income.
For deeper detail on how the income side behaves at this size, see Lendmire’s piece on how super jumbo STR income rules work for luxury Airbnb operators.
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.
How STR Income Gets Counted on a Condo
STR income is not gross nightly revenue. Across the network, it counts at 80% of gross. On a refinance, the lender uses twelve months of operating history. On a purchase, it uses the appraisal’s short-term-rent analysis. The investor must be experienced, with twelve months owning income property in the last thirty-six. STR files are not on the no-ratio path.
Loan size scales faster than rent, so coverage thins as price rises. Add large association dues and a luxury condo can slip under 1.00 even when the unit books well. Coverage from 0.75 to 0.99 is a real path on long-term-rent files through select programs to $2,000,000, though LTV and terms adjust, subject to underwriting; short-term-rental files need coverage of 1.00 or higher. Lendmire’s guide to sub-1.00 requirements for luxury STR operators covers that route.
In files like these, the questionnaire is the slowest-moving piece. It often comes back after the investor has already paid for inspection and appraisal. Requesting it, the HOA rental rules and the litigation status first saves money.
Three Scenarios That Show the Collision
A warrantable tower that bans short rentals. The building passes every agency test, yet the HOA prohibits short-term stays. Warrantable status does not matter. The STR plan is dead, and the file falls back to long-term rent coverage.
An investor-heavy, non-warrantable building. Most units are rented and one owner holds a large block. For an agency loan, that is a hard no. For a DSCR file, it is a soft flag. The unit lands in the non-warrantable bucket, capped at 75% and $1,500,000, with fewer lenders at the table.
A building drifting toward hotel treatment. A resort manager runs front-desk services and offers an optional revenue-share program. A lender may treat it as a condotel. Caps stay at $1,500,000, refinance leverage drops to 65%, and the file is reviewed case by case.
Edge Cases That Break the General Rule
- Cash-out. Unlimited proceeds are available at or below 60% LTV. Above 60%, proceeds cap at $1,500,000. There is no cash-out above $3,000,000. STR cash-out leverage tops out at 70%, while a standard rental tops out at 75%.
- Second liens. A second lien on a condo is generally limited to warrantable buildings.
- HOA rule changes. An HOA can amend its rules after you buy. Whether a new rule binds an earlier buyer varies by state and by the documents. Ask an attorney.
- Bank-statement alternative. That route tests deposits instead of property rent. It is reviewed on documented income under the applicable program, subject to lender guidelines. Exit planning matters, because a non-warrantable building has a narrower buyer pool.
- Reserves. Six months of PITIA on the subject property, or ITIA if interest-only, and twelve months for first-time investors. Cash-out proceeds never satisfy reserves above $3,000,000.
What the Investor Decision Looks Like
Start with the building, not the unit. Get the questionnaire, rental rules and litigation status before you pay for an appraisal. Then decide which bucket you are in and whether your loan size fits the cap.
If you want more than $1,500,000 on a non-warrantable or condotel unit, you will need a bigger down payment or a different building. If you need STR income to carry the file above $2,000,000, expect long-term rent logic to do the work. Interest-only for 120 months, to 75% and coverage of 0.75 or better, qualified on ITIA, can help the numbers breathe. The program also allows entity vesting without layered entities.
For the full mechanics of how these loans work, see the complete DSCR loans guide.
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. It arranges business-purpose financing through select lenders in its wholesale network across 41 markets, including Washington, D.C.
Frequently Asked Questions
Can a non-warrantable condo get a super jumbo DSCR loan?
Rarely. A non-warrantable unit generally caps at 75% leverage and $1,500,000 through select wholesale programs. The super jumbo ladder starts past $3,000,000, so the two ranges do not overlap, subject to underwriting.
Does STR activity make my condo non-warrantable?
Not by itself. Under the agency definition, “primarily transient” refers to predominant use of the building for short-term rentals. Seasonal rentals by resident owners do not meet it. Hotel services, pooling and revenue sharing push a building closer to condotel treatment.
Can a building be warrantable and still ban Airbnb?
Yes. Warrantability and STR permission are separate tests. The HOA documents and local rules control permission, and municipal approval is documented per property.
What is the difference between non-warrantable and condotel?
They are different categories with different caps. Non-warrantable reaches 75% leverage and $1,500,000. A condotel reaches 75% on a purchase and 65% on a refinance, also to $1,500,000, with $250,000 cash-in-hand. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
What if the building’s status changes after I buy?
Status is reassessed at each application. A new lawsuit or delinquency spike can change the bucket when you refinance, so plan your exit for a narrower buyer pool.
Lendmire’s self-employed mortgages page presents both super jumbo programs, bank statement and DSCR, side by side.
About Lendmire
As a DSCR and non-QM mortgage broker, Lendmire — NMLS# 2371349 — connects investors with wholesale lending channels across 41 markets, including Washington, D.C. The property’s rental income, not the borrower’s tax returns, is central to lender review, which works for self-employed operators and portfolios beyond four financed properties. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your investment property. No commitment required.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. NAHB on 2026 conforming loan limits
3. Fannie Mae Selling Guide B4-2.1-03
4. Freddie Mac Seller/Servicer Guide 5701.3
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 Super Jumbo DSCR Low Appraisal Options Work for Luxury STR Operators · Traditional Jumbo vs Super Jumbo DSCR After a Company Sale · How to Use Cross-Collateral to Qualify for a Super Jumbo DSCR Loan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.