The Quick Read: The loan amount is the lowest of several ceilings: the leverage cap, the debt the unit’s rent can carry after HOA dues, taxes and insurance, the program’s loan-size limit, and the appraised value. Most investment-property purchases land at 75%–80% LTV, so a condo with strong rent and modest dues can borrow near the cap. A condo with heavy dues, thin rent, or a troubled building borrows less, and sometimes much less. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
- Rent sets the coverage ceiling. DSCR (debt service coverage ratio) compares rent to the full monthly payment, and condo dues sit inside that payment.
- Value sets the leverage ceiling. LTV (loan-to-value) is the loan divided by the lower of price or appraised value.
- The building matters. A non-warrantable project narrows the lender pool and usually lowers leverage.
- How the unit is rented matters. Long-term and short-term income can support different loan sizes on the same unit.
- Credit and reserves still count. The property is the main qualifier, not the only one, and every file is underwritten individually.
What a DSCR Loan Measures on a Condo
A DSCR loan qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. The lender divides the unit’s rent used for lender review by its monthly PITIA. PITIA means principal, interest, property taxes, insurance, and association dues.
DSCR Calculator
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Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Oct 29, 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 29, 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.
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.
The ratio is not a cash-flow number. It compares rent to PITIA only. Repairs, vacancy, management, utilities, and capital reserves sit outside the calculation. A condo can clear the coverage test and still lose money in a slow month. Lendmire’s complete DSCR loans guide covers the basics if this is your first file.
How a Lender Sizes the Loan, Step by Step
Sizing runs in a fixed order. Each step can cap the loan before the next one begins.
1. Classify the building. The lender decides whether the unit is in a warrantable condo project, a non-warrantable project, or a condotel. This sets which programs and leverage tiers are open.
2. Establish rent used for lender review. A long-term rental uses a lease or an appraiser’s market-rent opinion. A short-term rental uses booking history or a market projection, covered below.
3. Build the payment. Add taxes, insurance, and HOA dues to principal and interest. The dues are fixed by the association, so the lender cannot negotiate them down.
4. Run the coverage ceiling. Divide rent used for lender review by the required coverage ratio. That gives the largest payment the rent can carry. Subtract taxes, insurance, and dues. What remains is the budget for principal and interest, which converts into a maximum loan.
5. Apply the leverage ceiling. The loan cannot exceed the LTV cap times the lower of contract price or appraised value.
6. Final review. Credit score, reserves, the HOA questionnaire, project documents, and any short-term rental questions.
The lowest result wins. Coverage binds on high-dues buildings. Leverage binds on well-rented units with modest dues. The loan-size limit binds mostly on large balances.
Which Ceiling Binds? Three Illustrative Cases
The cases below use ratios and percentages only. They are modeled assumptions, not market data.
| Case | Rent vs payment | Likely binding ceiling |
|---|---|---|
| Modest dues, strong rent | Around 1.3x | Leverage cap |
| Heavy dues, same rent | Near 1.0x | Coverage |
| Low appraisal, any rent | Varies | Value |
In the first case, the loan sits at the LTV cap and coverage is comfortable. In the second, the same rent barely clears the floor, so the lender trims the loan until coverage works. A larger down payment lowers the payment and lifts the ratio, but it does not erase credit floors, reserve rules, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.
Why HOA Dues Change the Number
Two condos with identical rent can borrow very different amounts. Dues are part of the payment, so every dollar of dues is a dollar the rent cannot spend on debt. Oceanfront buildings with amenities, elevators, and large insurance programs tend to carry higher dues than older low-rise buildings.
Special assessments add a second problem. A large assessment can raise the payment. It can also make the project non-warrantable, which changes the whole program. Ask for the budget, the reserve study, and any pending assessments before you sign a contract.
Warrantable, Non-Warrantable, and Condotel
A warrantable condo meets agency-style project rules on owner mix, litigation, commercial space, and reserves. A non-warrantable condo fails at least one of them. A condotel is a building run like a hotel, often with a rental pool and front desk. The categories overlap, but they are not the same thing.
North Myrtle Beach has many resort-style and investor-heavy buildings, so non-warrantable status is a real possibility. Scotsman Guide reports that DSCR financing covers both warrantable and non-warrantable condos, and that investors often turn to it for units that agency loans will not take. The same article notes that agency loans stop at 10 financed properties, while DSCR loans have no such limit.
Lender appetite varies. Across the wholesale network Lendmire places files with, a non-warrantable condo goes to a narrower group of lenders, usually at lower leverage than a warrantable unit. Condotels tend to be the tightest category. The tradeoff shows up at resale, because the next buyer may need cash or a non-agency loan.
Long-Term vs Short-Term Income on the Same Unit
The rent figure can change the loan more than any other input. A long-term lease is simple. A short-term rental takes more proof.
On short-term rentals, select programs in the network allow:
- Purchase leverage up to 75% LTV on an investment property.
- Rate-and-term refinance leverage around 70% LTV.
- A cash-out ceiling of 70% LTV on short-term-rental collateral, versus 75% on a standard long-term rental.
- A credit score of 640 or higher.
- About 12 months of hosting history.
- A 1.00 coverage floor on purchases. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Lenders may use trailing platform statements, a market projection, or an appraiser’s income analysis. An appraisal-industry firm, Class Valuation, argues that the standard rent schedule (Form 1007) cannot support short-term income. Its view is that a separate appraiser narrative does that job. Form 1025 is the income form for 2–4 unit properties, and it is not a condo form.
Beach markets are seasonal, so a trailing 12-month figure matters. AirDNA reports 56% average occupancy, a $369 average daily rate, and 9,297 properties in North Myrtle Beach. Your own unit may differ a lot, and a lender may discount a projection when hosting history is short.
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. The City of North Myrtle Beach short-term rental page is the place to start. The HOA’s own rental policy can decide whether short-term income is usable at all.
For related reading, see Lendmire’s piece How Much a DSCR Lender Lends on a Resort Condo Rented Short-Term.
What the Network’s Programs Typically Allow
These figures are typical ranges from select lenders in Lendmire’s wholesale network. They are not guarantees, and every file is underwritten individually.
| Item | Typical range |
|---|---|
| Purchase LTV, investment property | 75%–80% |
| High-leverage purchase | Up to 85% with about 700+ |
| Cash-out LTV, standard rental | About 75% |
| Cash-out seasoning | About 6 months |
| Credit score | 620 floor; most want about 660 |
| Strongest leverage tiers | 700+ |
| Loan size | Up to $3,000,000 |
| Reserves | About 6 months PITIA |
A few notes sit behind the table.
- Coverage. A 1.00 ratio is where select programs start. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. No-ratio structures are available only through select lenders, generally for borrowers who already own a primary residence.
- Reserves. 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. Above $2,500,000 the network generally holds to 30-year fixed structures.
- Term structures. The 30-year fixed is the spine. Select lenders offer 40-year terms and interest-only periods, and ARM structures exist.
- State rules. No state-specific leverage overlay applies here. South Carolina condos take the standard purchase tiers.
North Myrtle Beach by Area
Cherry Grove, Ocean Drive, Crescent Beach, and the Barefoot Resort area each have their own mix of building ages, amenities, and rental programs. Treat every building as its own file. The questions that change the loan are the same everywhere:
- What do dues look like against rent?
- Is the building investor-heavy?
- Does the association allow the rental type you plan?
- Is there a rental pool or hotel-style management?
Oceanfront towers and older low-rise buildings sit in different places on the dues-versus-rent spectrum. Do not assume a neighboring building will size the same way.
The related piece How Much a DSCR Lender Lends on a Beach House Rental covers the detached-home side of the coast.
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.
What Can Shrink Your Loan
A condo loan shrinks for a handful of reasons.
- A low appraisal. The loan uses the lower of price or appraised value. If the appraisal lands under the contract, the loan drops with it, and you cover the gap with cash.
- A coverage shortfall. Rent too low for the payment forces a smaller loan, a larger down payment, or a different program.
- Reserves. A file at high leverage or a large balance needs more months of PITIA on hand.
- Credit. A score near the floor limits leverage. A score of 700 or higher opens the strongest tiers.
- The project itself. Litigation, heavy commercial space, or an investor-heavy ownership mix can move the unit into non-warrantable territory.
One pattern shows up often on beach-condo files. Coverage looks fine on the listing’s rent claim, then slips once the real dues and insurance line arrive. Get the HOA budget and the building’s insurance cost before you rely on any ratio.
Pre-Offer Checklist
- Request the HOA budget, reserve study, rental policy, and project questionnaire.
- Ask whether any special assessment or litigation is pending.
- Decide whether you will underwrite on a long-term lease or on short-term income.
- Gather trailing 12-month booking statements if the unit already hosts.
- Run the coverage math with the real dues, taxes, and insurance.
- Plan for the case where the appraisal comes in low.
- Tax treatment varies, so consult a qualified professional.
Key Terms Defined
DSCR: the ratio of a property’s rent used for program review to its monthly PITIA.
PITIA: principal, interest, taxes, insurance, and association dues, the full monthly obligation.
LTV: the loan amount divided by the lower of purchase price or appraised value.
Warrantable condo: a unit in a project that passes agency-style rules on owner mix, litigation, and reserves.
Non-warrantable condo: a unit in a project that fails at least one of those rules, which narrows the lender pool.
Condotel: a building run like a hotel, often with a rental pool and shared management.
Seasoning: the waiting period a lender wants between buying a property and a cash-out refinance, commonly about 6 months.
Frequently Asked Questions
Does a condo get a smaller loan than a house?
Often, yes, at the same rent. Dues take a share of the payment that a house does not carry. Non-warrantable or condotel status can also lower the leverage cap. A warrantable condo with modest dues can borrow near the same percentages as a house.
Do HOA dues count in the DSCR?
Yes. Dues are part of PITIA, so they sit in the denominator. Higher dues lower the ratio and the loan the rent can support.
Can I use a DSCR loan for a short-term rental condo in North Myrtle Beach?
It can work, subject to lender guidelines. Select programs want about 12 months of hosting history, a score of 640 or higher, and leverage up to 75% LTV on a purchase. The HOA must also allow the rental type.
What if the coverage ratio is under 1.00?
Select lenders in the network offer paths below 1.00, with leverage and terms adjusted. Expect a larger down payment or stronger credit and reserves. Eligibility depends on the file.
What happens if the appraisal comes in low?
The loan is sized on the lower of price or appraised value, so it shrinks. You either bring more cash, renegotiate the price, or walk if the contract allows.
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 broker that arranges financing through select lenders in its wholesale network across 41 markets, including Washington, D.C. This is not a commitment to lend.
The calculator on this site gives an illustrative estimate and not a quote.
About Lendmire
A non-QM mortgage broker (NMLS# 2371349), Lendmire arranges DSCR financing for real estate investors in 41 markets — 40 states plus Washington, D.C. Because deals are underwritten primarily on property cash flow rather than personal income documentation, the structure suits self-employed buyers and entity-owned portfolios. Lendmire places loans through wholesale investor lenders; it is not a direct lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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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, “Invest in Your Future”
2. Class Valuation, Form 1007 and short-term rentals
3. AirDNA, North Myrtle Beach overview
4. City of North Myrtle Beach, Short-term Rentals
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 a DSCR Lender Lends on a Rental Held in an LLC · How Much a DSCR Loan Lends on a Business Acquisition · How Much a DSCR Loan Lends on a Converted Rental Home
Guides: DSCR Loans in North Myrtle Beach, SC · DSCR Loans in South Carolina
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.