The Quick Read: HOA dues are counted inside the monthly payment, not subtracted from rent, so every dollar of dues lowers the coverage ratio dollar for dollar. A warrantable condo still gets a separate building review, and the association’s rental rules must permit the plan.
- Dues sit in the denominator with principal, interest, taxes, and insurance (PITIA).
- Take the dues figure from the association’s budget, never the listing page.
- A condo and a house at the same rent can score differently, because the condo carries one more line.
- Warrantability is about the building. The ratio is about the unit’s rent against its payment.
- Clearing the coverage number is not the same as positive cash flow.
How Do HOA Dues Enter the DSCR Calculation?
Dues are the “A” in PITIA. The lender divides monthly rent by the full payment: principal, interest, taxes, insurance, and association dues. Nothing gets netted from rent. Scotsman Guide describes DSCR loans as measuring a property’s ability to cover mortgage payments, taxes, insurance, and HOA fees.
DSCR Calculator
Run the 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 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.
Here is what that does in practice. Picture two properties with identical rent and identical loan terms, one a house and one a condo. The condo’s ratio comes out lower, because its denominator holds the dues. For the same coverage floor, the condo supports a smaller loan.
Across the wholesale network Lendmire works through, 1.00 is where select programs start, and stronger ratios open better pricing and leverage. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Dues are a permanent drag on whichever path you use. They push the ratio down every month the loan exists.
Mistakes that come up again and again:
- Netting dues from rent. The method is wrong. Dues belong in the payment.
- Running the ratio on principal and interest only. That overstates coverage. Taxes, insurance, and dues all count.
- Using the seller’s or listing’s figures. Old tax, insurance, and dues numbers understate the real payment.
- Ignoring a pending increase. A dues increase before closing changes the ratio.
For the broader mechanics, see Lendmire’s complete DSCR loans guide.
Key Terms Defined
PITIA: Principal, interest, taxes, insurance, and association dues, the full monthly obligation used in the ratio.
HOA dues: The recurring charge the association collects from unit owners for shared costs.
Special assessment: A one-time or installment charge the association levies on top of regular dues, often for major repairs.
Master policy: The association’s insurance on the building, paid through the dues.
HO-6: The unit owner’s own insurance policy covering the interior and personal liability.
Warrantable: A project that meets the agencies’ tests and is eligible for Fannie Mae and Freddie Mac financing.
Non-warrantable: A project that fails one or more of those tests and needs alternative financing.
What Counts as Dues, and What Doesn’t?
Recurring mandatory dues always count. The edge items vary by program, so the table shows the usual treatment and the reasoning.
| Item | Usually in PITIA? | Why |
|---|---|---|
| Mandatory monthly dues | Yes | Recurring, unavoidable cost |
| Master-policy pass-through | Yes | Already inside the dues |
| Optional amenity fees | Varies | Depends on whether the owner can opt out |
| One-time special assessment | Often not | Frequently treated as cash or reserves |
| Installment assessment (active) | Often yes | Some lenders convert it to a monthly figure |
| Quarterly or annual billing | Yes | Convert to a monthly amount first |
If dues are billed quarterly, divide by three before testing. If annual, divide by twelve. Skipping this step is an easy way to overstate coverage.
Special assessments deserve extra care. Scotsman Guide notes that deferred maintenance can lead to a large special assessment on top of regular dues. Treatment differs by program, so confirm it before you write the offer. Some lenders treat a one-time assessment as a reserves or cash-to-close item. Others add an active installment to PITIA.
Does a Warrantable Condo Matter for a DSCR Loan?
Yes, but in a different way than in conventional lending. Warrantability is an agency label for a building that qualifies for Fannie Mae and Freddie Mac financing. DSCR loans are non-QM, business-purpose products, so the lender’s own guidelines govern. The building is still reviewed, though.
That is the apparent contradiction worth resolving. The agency test is not the DSCR gate, yet the same project facts still drive review and pricing. A warrantable building tends to pass project review more smoothly. A non-warrantable one narrows the lender pool and can change leverage and terms. According to Scotsman Guide, a non-warrantable project’s only route is alternative financing, which is where DSCR often comes in.
| Question | Conventional gate | DSCR project review |
|---|---|---|
| Who sets the rules? | Agency guides | Each lender’s guidelines |
| Is the building tested? | Yes, pass/fail | Yes, questionnaire and documents |
| Can a failing building proceed? | No | Often, with adjusted terms |
| Do dues enter the ratio? | Added back on Schedule E | Counted in PITIA |
Agency benchmarks make useful contrast. Freddie Mac caps units 60 or more days delinquent on assessments at 15%. The Fannie Mae Selling Guide requires a budgeted replacement reserve of at least 10% under its full review. Those are agency rules, not DSCR rules. Still, they show what a lender reads as a healthy building: low delinquencies and a budget that funds repairs.
What Does the Lender Review in the Building?
Expect the lender to send a condo questionnaire to the association. It typically asks about developer control, ownership concentration, delinquencies, litigation, commercial space, insurance, deferred maintenance, and reserves. Lenders in the network vary in how deep they go, and the agencies’ own limited-review option has been retired, so assume a real review.
The documents behind that review map to specific underwriting questions:
| Document | What it shows | Question it answers |
|---|---|---|
| Operating budget | Dues, reserve funding | Are dues likely to rise? |
| Financials | Cash position, arrears | Is the association solvent? |
| Reserve study | Repair funding needs | Is an assessment coming? |
| Master insurance certificate | Building coverage | Is the building insured adequately? |
| Delinquency report | Unpaid assessments | Are owners paying? |
| Litigation disclosures | Pending claims | Is there financial exposure? |
| Governing documents | Rental rules | Can the unit be rented as planned? |
Single-entity ownership and commercial space can also trip a project. One summary from governingdocs.dev lists more than 20% single-entity ownership in a 21-plus unit project and more than 35% commercial floor area as failing tests under agency rules. Treat those as contrast figures, not network requirements.
Can the HOA’s Rental Rules Block the Deal?
Yes, and no loan structure overrides it. A warrantable building can still ban rentals, cap the number of rented units, or require long minimum lease terms. A mandatory rental pool is another dealbreaker for a standard long-term plan.
Read the governing documents before the offer. The rent used for qualification has to be rent the owner can actually collect under those rules. If you plan short-term rentals, remember that 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.
Condotels are a separate case. Rent is net of operator splits and fees, and the structure gets its own review.
How Do You Stress-Test Dues Before You Apply?
Run the ratio three ways: with today’s dues, with a plausible increase, and with any active assessment installment included. If coverage only clears at today’s dues, the file has no cushion.
Say you own a condo that clears a select program’s 1.00 floor with room to spare. Add a meaningful dues increase and a monthly assessment installment, and the same unit can slip below. That matters for two reasons.
First, the ratio shifts. Second, a heavier payment base can raise reserve requirements. Reserves commonly run around 6 months of PITIA, and PITIA includes dues. Loans above $1,500,000 typically step up to about 9 months. Thin reserves in the building also invite assessments, which can push a building toward non-warrantable status.
When the coverage number is thin, a larger down payment lowers the payment and can lift the ratio. It never erases leverage caps, credit floors, or reserve rules, though. The strongest files clear both tests: enough equity and enough rental coverage. For more on that, see Lendmire’s piece How to Raise a Thin DSCR on a Condo With HOA Dues.
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.
Clearing the Ratio Is Not Positive Cash Flow
DSCR compares rent to PITIA only. It leaves out repairs, vacancy, management, utilities, and capital expenses. A condo that clears 1.00 can still lose money after a few empty months or a special assessment.
An assessment often lands on your cash or reserves rather than in the ratio. That makes it easy to underestimate. Keep a separate cushion beyond what the lender requires.
What Program Terms Apply on a Condo?
Terms depend on the lender, the property, and the borrower, and every file is underwritten individually. Across the network, typical purchase leverage runs 75%–80% LTV on an investment property, with select high-leverage programs reaching 85% LTV at roughly a 700+ score. Cash-out refinances top out around 75% LTV. Credit floors start at 620 in parts of the network, most programs want about 660, and 700+ unlocks the strongest tiers. Standard loan sizes run up to $3,000,000.
Non-warrantable condos can see tighter leverage and adjusted terms through select lenders. Market surveys report lower leverage and higher coverage minimums for those buildings. Those are market-wide observations, not network figures. For the dues side of that structure, Lendmire’s article How a Non-Warrantable Condo Is Defined and How HOA Dues Enter DSCR PITIA goes deeper.
Term structures center on the 30-year fixed. Extended terms and interest-only periods are available through select lenders, and ARM structures exist. Tax treatment varies; consult a qualified professional.
A Pre-Offer Checklist
1. Request the association’s current budget and the dues billing schedule.
2. Ask for the condo questionnaire, reserve information, and master insurance certificate.
3. Read the rental rules for bans, caps, minimum terms, and rental pools.
4. Ask about pending or approved dues increases and special assessments.
5. Normalize dues to a monthly figure.
6. Build the payment with real taxes, insurance, and dues.
7. Run the ratio at today’s dues and at a higher-dues cushion.
8. Confirm the building’s status with the lender before you commit.
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 broker arranging financing through select lenders in its wholesale network across 41 markets, including Washington, D.C. Eligibility is subject to lender guidelines and is not a commitment to lend.
Frequently Asked Questions
Do HOA dues reduce my DSCR?
Yes. Dues sit in the denominator with principal, interest, taxes, and insurance, so higher dues lower the ratio. They are never subtracted from rent.
Where should I get the dues figure?
From the association’s budget or questionnaire, not the listing. If the two disagree, use the association’s number and confirm any pending changes.
Does a special assessment count in the ratio?
It depends on the program. Some lenders treat a one-time assessment as a cash or reserves item, and some convert an active installment to a monthly amount in PITIA. Confirm treatment before you make an offer.
Is a non-warrantable condo off the table?
No. It narrows the lender pool and can change leverage and terms, but it does not end the deal. Rental bans and mandatory rental pools can.
Is quarterly billing handled differently?
The lender tests a monthly amount. Divide quarterly dues by three, or annual dues by twelve, before running the ratio.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage focused on DSCR investor financing, helping arrange programs through wholesale and investor-lending channels in 41 markets, including Washington, D.C. DSCR loans are evaluated by the lender on property cash flow rather than personal income, subject to lender guidelines, supporting LLC closings and accommodating investors with four or more financed properties. Scotsman Guide 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. Scotsman Guide, Get in the Game
2. Scotsman Guide, The Condo Conundrum
4. Fannie Mae Selling Guide B4-2.2-02
5. governingdocs.dev, condo lender questionnaire failures
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: DSCR Loan Rent and Payment Inputs for a Condo With Dues · DSCR Flood Insurance Requirements for a Property With an LOMA · DSCR Down Payment Requirements With Gift Funds From Parents
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
Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.