The Quick Read: The most you can borrow is the lowest of four limits: the leverage cap for a condo in an investment refinance, the loan your rental coverage supports, the program’s maximum loan size, and the amount you need to pay off the old loan plus costs. A rate-and-term loan sends no cash to you, so the payoff often sets the number before anything else does.
- On an investment-property rate-and-term refinance, leverage reaches 85% of appraised value on select programs. Condo caps are typically lower than that headline ceiling.
- A cash-out refinance on an investment property tops out around 75% across most of the network.
- Standard programs go up to $3,000,000, and reserves step up to about 9 months above $1,500,000.
- HOA dues sit inside the payment, so a condo can fail the coverage test even when the leverage test passes.
- Building-level issues, such as litigation or heavy investor concentration, can shrink the loan or change the program.
This guide is about a condo you already own as a rental. You want to swap the current loan for a new one, change the terms, and take nothing out. Here is how the maximum is built.
What Does “Borrow” Mean in a Rate-and-Term Refinance?
On a rate-and-term refinance, you borrow only what it takes to retire the old loan and cover allowed costs. The new loan replaces the old one with different terms. No equity comes back to you as cash.
That changes the question. On a cash-out loan, you ask how much extra you can pull. Here you ask whether the ceiling is high enough to cover the payoff. If it is, you refinance with room to spare. If it is not, you bring cash to closing or change the structure.
Two amounts make up the new loan:
1. The payoff on your current loan, including any prepayment penalty it carries.
2. Closing costs the lender allows you to finance.
Nothing else belongs in it. Once the loan goes meaningfully past payoff and costs, the file is a cash-out refinance with its own lower leverage cap and seasoning rules.
Seasoning is the waiting period a lender wants between buying a property and refinancing it. On rate-and-term files it varies by lender. About 6 months is the common expectation on cash-out.
DSCR 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. That is why the property’s rent matters more than your paycheck.
How Is the Maximum Loan Calculated?
Take the lowest of four numbers. Whichever one is smallest is your ceiling.
- Leverage cap. Multiply the appraised value by the program’s loan-to-value limit. LTV is the loan balance divided by the property’s value.
- Coverage cap. DSCR, the debt service coverage ratio, divides the property’s rent by its full monthly obligation. That obligation is principal, interest, taxes, insurance and HOA dues, together called PITIA. A bigger loan means a bigger payment, so coverage limits how large the loan can grow.
- Program maximum. Standard programs in the network go up to $3,000,000. Above $2,500,000, the network generally holds to 30-year fixed structures.
- Actual need. The payoff plus allowed costs. You do not get to borrow more than you need on this loan type.
Here is a modeled scenario, not a market fact. Say your payoff plus costs equals 55% of the condo’s appraised value. Any cap above that leaves comfortable room. Say the payoff plus costs equals 80% of value instead, and your condo’s cap lands below that. Now you are short, and the gap is cash you bring or a structure you change.
Each number can fail on its own. Passing the leverage test does not excuse failing the coverage test. A good appraisal does not rescue weak rent.
Rate-and-Term vs. Cash-Out: Where Do the Ceilings Sit?
Rate-and-term carries the higher leverage ceiling because you take no cash. The lender’s risk is lower when the loan only replaces existing debt. Here is how the two compare on an investment property.
| Factor | Rate-and-term | Cash-out |
|---|---|---|
| Leverage ceiling | Up to 85% on select programs | Around 75% across most of the network |
| Condo treatment | Typically lower than the headline ceiling | Tighter still |
| Cash to you | None beyond payoff and costs | Yes, from equity |
| Seasoning | Varies by lender | About 6 months common |
The 85% figure is a ceiling for the strongest files on select programs, not a promise for a condo. For a condo, the building is part of what the lender reviews. The cap you get depends on the program, your credit, the loan size and the building. Treat 85% as the outer edge and expect the condo number to sit below it. A lender confirms the exact cap on your file.
Purchase leverage, for context, usually lands at 75% to 80% on investment property. A few high-leverage purchase programs reach 85% with roughly a 700 score. Your refinance cap will not always match your purchase cap, so ask for the refinance number specifically.
If you want the mechanics of the transaction beyond condos, Lendmire’s piece Rate and Term Refinance Investment Property walks through the basics.
How Does the Building Change Your Ceiling?
The building can lower your ceiling, push you into a different program, or sink the file. Lenders review the condo project as well as your unit. They look at the homeowners association questionnaire and project documents. They check the same categories most lenders check:
- Reserve funding.
- Dues delinquencies.
- Pending litigation.
- Investor concentration, meaning how many units are rentals.
- Commercial space in the building.
A building that fails agency standards is called non-warrantable. That label only describes the building. It does not mean the unit cannot be refinanced. DSCR loans are not agency products, and many lenders in the network finance buildings that agency programs reject.
For contrast, agency guidance treats certain project types as ineligible. Fannie Mae’s project review waiver guidance lists condo hotels and motels, houseboat projects and timeshares as ineligible. Its condo FAQ says a project that is primarily transient is ineligible on that characteristic alone. Those are agency rules, and they do not set DSCR terms. They do explain why condotels and heavily transient buildings get tighter treatment on investor files.
Three building situations shrink or complicate the loan:
- Condotels. These are condo units run like hotel rooms. They sit in a tighter bucket, with lower leverage and a smaller maximum than a standard condo.
- Short-term-rental-heavy buildings. On short-term-rental collateral, refinance leverage runs around 70%. Expect a 640+ score and about 12 months of hosting history. 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.
- Buildings in litigation or with thin reserves. These can push the file to a different program, lower the cap, or stop it.
A building’s status can shift while your file is open. Refresh the HOA questionnaire close to the end of the process so a stale answer does not surprise you.
How Do HOA Dues Change the Number?
HOA dues go into the denominator of your DSCR. A condo and a house with identical rent can show very different coverage because of dues. Dues raise PITIA, and a higher PITIA lowers the ratio.
Picture a condo where rent covers the full obligation at around 1.15x. Then the association raises dues or levies a special assessment. Coverage slips to just under 1.00x. The rent did not change and the loan did not change. The file still got weaker.
On coverage itself, 1.00 is where many select programs start. It is a floor for those programs, not the standard for every lender. Stronger ratios open better pricing and more leverage. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Either way, ask what the ratio looks like with today’s dues in it, not last year’s.
Two details about rent matter here.
- The appraiser documents market rent. A one-unit condo uses the single-family rent schedule, Form 1007. A two-to-four unit property uses Form 1025.
- Many programs underwrite on the lower of the in-place lease rent or the appraiser’s market rent. A lease signed below market can hold your coverage down.
One caution about what the ratio means. Clearing 1.00 does not mean the condo cash flows. DSCR compares rent to PITIA and nothing else. Repairs, vacancy, management, utilities and capital expenses sit outside it.
What Other Limits Apply to Condo Files?
Beyond leverage and coverage, a few program rules cap the loan or decide whether you qualify at all.
Credit. A 620 floor exists in parts of the network. Most programs want around 660. A 700 score or better unlocks the strongest leverage tiers.
Reserves. Reserves are cash you hold after closing. They vary by lender, leverage, loan size and transaction type. About 6 months of PITIA is common. Conservative rate-and-term files at modest leverage under $1,500,000 can see reserves waived. Loans above that size typically step up to about 9 months.
Loan size. Standard programs run up to $3,000,000, and smaller balances route through select lenders in the network. Past $2,500,000, expect 30-year fixed structures.
Term options. The spine is the 30-year fixed. Select lenders offer 40-year terms and interest-only periods. Adjustable structures exist for investors who want them.
Title. Many investors hold the condo in an LLC, subject to program terms. If you are moving title as part of the refinance, raise it at the start so the lender can confirm how the vesting works.
A bigger down payment, or in a refinance a lower balance against value, can lower the payment and lift coverage. It never erases a leverage cap, a credit floor, a reserve rule or a property-eligibility problem. The strongest files clear both tests: enough equity and enough rental coverage.
Which Costs Can You Roll In, and When Does It Become Cash-Out?
You can usually size the new loan to include the payoff and closing costs the lender allows. The exact list depends on the lender. The line to watch is cash to you. Once the loan exceeds payoff and allowed costs by a meaningful amount, the file becomes cash-out. That brings a lower leverage cap and seasoning rules.
Your current loan’s prepayment penalty counts as part of the payoff. A prepayment penalty is a fee some investor loans charge when you pay them off early. Get a payoff letter before you order anything. Compare it to the loan size your value and coverage support. That one comparison tells you whether the refinance works on paper.
If you are drifting toward a small cash-out, decide on purpose. A modest cash-out can cost you leverage. Staying rate-and-term and bringing a little cash can leave you on the better side of the cap. Lendmire’s complete guide to rate-and-term investment refinancing covers that choice in more depth.
Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
Three Modeled Scenarios
These are illustrations of how the limits interact. They are not market data and not offers.
A comfortable fit. The payoff plus costs equals a modest share of appraised value. The building passes project review. Rent covers the full obligation, dues included, at better than 1.2x. The leverage cap is not close. Credit sits above 700. This is the clean rate-and-term file, and the lender’s reserve rules are the only remaining question.
A payoff above the cap. The payoff plus costs equals a high share of value, and the condo’s cap sits below it. The ceiling is short by the difference. You can bring cash to closing, wait for the value or balance to improve, or look at a different structure. Cash-out is not the answer here, because its cap is lower still.
Coverage that fails on dues. Leverage is fine. But coverage sits just under 1.00x once the full dues are in. A select-lender path with coverage below 1.00 may exist, with leverage and terms adjusted. A lower balance, a higher rent used for lender review or a longer interest-only period can also change the ratio. A lender reviews each of these on the specific file.
What Can Shrink Your Loan?
Most shrinkage comes from a short list. Check these before you apply.
- A condo cap below the prevailing pricing-and-term ceiling.
- A credit score that drops you into a lower tier.
- Rent that comes in below the lease or below your assumption.
- HOA dues or special assessments that cut coverage.
- Litigation, delinquencies or reserve gaps in the building.
- High investor concentration or commercial space.
- A condotel or transient-heavy building.
- A loan size that moves you into higher reserve requirements. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
How Do You Check Your Own Number?
Run the check in this order. It takes a few minutes with a payoff letter in hand.
1. Get the payoff. Ask your servicer for a payoff letter, including any prepayment penalty.
2. Estimate value. Use a realistic number, not a hopeful one.
3. Find your payoff-to-value share. Divide the payoff by value, then add closing costs. That is the share of value you need to borrow.
4. Compare to the cap. Ask what the condo cap is for a rate-and-term refinance on your credit tier and loan size.
5. Test coverage. Divide the rent used for program review by the full obligation, dues included.
6. Check reserves. Confirm what cash the program expects you to hold after closing.
7. Ask about the building. Find out whether the project review raises any flag.
Steps 3 and 5 are simple division, so a pencil and your payoff letter are enough. For a second set of eyes on the numbers, call the team at 828-256-2183. Programs change, and every file is underwritten individually.
Frequently Asked Questions
Can I roll closing costs into a rate-and-term refinance on a condo?
Usually yes, up to the limit the lender allows. The new loan is sized to payoff plus allowed costs, and it must still fit under the leverage cap. If the costs push you over, you bring the difference in cash.
Does a non-warrantable condo rule out a refinance?
No. Non-warrantable means the building fails agency standards. Many DSCR lenders in the network finance such buildings. Condotels and heavily transient buildings get tighter treatment, so expect a lower cap or a smaller maximum loan.
Can I refinance if my rent barely covers the payment?
It depends on the program. Many select programs start at 1.00 coverage. Dues are part of the payment, so run coverage with them included.
Can an LLC hold title on the condo?
Often, subject to program terms. Some lenders want the vesting in place before the application, and others review a transfer as part of the file. Raise it early so the lender can confirm the path.
How is this different from a cash-out refinance?
A rate-and-term loan returns no cash and has the higher leverage ceiling. A cash-out loan on an investment property tops out around 75% across most of the network, with about 6 months of seasoning common. Borrowing past payoff and costs turns the file into cash-out.
Next Step
If you are buying or refinancing a rental property and want to see how the numbers work, Lendmire can help you compare DSCR loan options based on the property income, credit profile, leverage, and investor goals. Lendmire is a mortgage broker that arranges these loans through select lenders in its wholesale network, across 41 markets including Washington, D.C. You can reach the team at 828-256-2183. For the full picture of how these programs fit together, read the complete DSCR loans guide. Qualification is subject to lender guidelines, and none of this is a commitment to lend.
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 traditional personal-income documentation, is central to program 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.
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References
1. Fannie Mae Selling Guide B4-2.1-02, Waiver of Project Review
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How Much Can You Borrow With a 40-Year Super Jumbo DSCR Loan? · How Big Can a Luxury Investment Property DSCR Loan Be? · Super Jumbo DSCR vs Regional Bank Condo Loan for a Portfolio Investor
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.