The Quick Read: A projection report is a third-party estimate of what a specific unit could earn as a short-term rental, and your broker or lender usually orders it for the subject address. The lender then adjusts that income, divides it by the full monthly obligation including HOA dues, and checks the result against program coverage rules. Condotels add extra steps because hotel-style buildings often fall outside standard financing.
- The report estimates revenue, average daily rate (ADR), and occupancy for one address.
- Lenders usually discount the projection before using it as qualifying income.
- HOA and resort dues sit in the payment, so they weigh heavily on a condotel.
- Select short-term-rental programs in Lendmire’s wholesale network go up to 75% LTV on a purchase, subject to lender guidelines.
- Comp quality decides how trustworthy the report is, and condotels are hard to comp.
You probably heard that a condotel is a hotel room you can own. That is close. Financing one means proving income on a unit that behaves like a hotel room and a condo at the same time. This walkthrough covers what the report is, how underwriting treats it, which structures exist, and where the usual rules break.
Short-Term Rental 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 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.
Key Terms Defined
DSCR (debt service coverage ratio): monthly rental income divided by the monthly housing obligation. It measures whether the property’s income covers its own payment.
PITIA: principal, interest, taxes, insurance, and association dues. On a condotel, the “A” is often the biggest surprise.
Condotel: a condo unit in a building run like a hotel, often with a front desk, central reservations, and a rental program.
Projection report: a data-provider estimate of annual revenue, ADR, and occupancy for a property with no operating history.
ADR: average daily rate, meaning the average nightly price a unit earns on nights it books.
Qualifying income: the income figure the lender actually uses after any discount. It is rarely the raw projection.
Form 1007: an appraiser’s market-rent schedule built around monthly leases. Multi-unit properties use Form 1025.
What Is a DSCR Projection Report for a Condotel?
For a short-term rental with no booking history, the projection is usually a report from a data provider such as AirDNA’s Rentalizer. AirDNA’s help center says Rentalizer estimates revenue, ADR, and occupancy from the historical performance of similar active listings nearby. You enter an address and the tool generates the numbers.
The report is not a loan approval or an appraisal. It is one input. The lender decides how much weight it gets, and that choice varies from program to program. Across the wholesale network Lendmire works with, lenders handle this differently, which is why the same unit can produce different coverage ratios from different lenders.
Why Does a Condotel Need a Different Path?
Condotels fall outside standard agency financing, so investors use non-QM channels such as DSCR loans. The Fannie Mae guide lists projects operated as hotels or motels as ineligible. That is why most condotel buyers end up on the investor side of the market.
That is the only agency detail you need. DSCR programs run on their own rules. They are business-purpose investor loans, reviewed differently from an owner-occupied mortgage, and they qualify primarily on property-level rental income covering the payment, subject to lender guidelines.
A condotel is also not the same thing as a non-warrantable condo. A non-warrantable condo can be flagged for litigation, thin reserves, or too many investor owners. A condotel is one reason a building lands in that bucket, but plenty of non-warrantable buildings are not hotels. Many lenders that accept ordinary non-warrantable condos still treat condotels case by case.
Which Income Method Will the Lender Use?
Lenders generally pick from three ways to document income on a condotel. Which one applies depends on the building, the program, and whether the unit has any history.
| Method | What it needs | Best fit | Relative strength |
|---|---|---|---|
| Appraiser rent schedule | Form 1007 or 1025 | Fallback or cap | Often lowest for STR |
| Rental-program statements | Operator statements | Units with history | Strong when documented |
| Third-party projection | Address-level report | New purchases | Depends on comp quality |
The appraiser’s schedule is built for monthly leases, not nightly stays. It often comes in well below short-term potential, which is why many investors lean on a projection or on actual statements. Statements from the building’s rental program usually carry more weight than a projection because they show real bookings. If you own a unit with a few months of statements, ask the broker how a lender would blend that history with a projection. Programs differ on this, and a partial record can help.
For short-term-rental files in the network, expect about 12 months of hosting history on standard files. A projection is how select lenders in the network handle purchases without that history. Whether a given lender accepts one depends on the program.
How Do You Get the Report, Step by Step?
Start by sorting out who orders it. The lender or broker typically orders the report for the subject address. You can also run your own before making an offer to see whether the deal is worth pursuing. Whether a lender accepts a report you pulled yourself is a program-level question, so ask before you rely on it. AirDNA’s allowances vary by subscription plan, so check what yours includes.
1. Classify the building. Confirm whether it has a front desk, central reservations, a mandatory or optional rental program, and hotel-style licensing. Tell your broker up front. It decides which program track applies.
2. Gather the unit facts. Bedrooms, bathrooms, guest capacity, and amenities. Wrong inputs produce a wrong report.
3. Ask the broker which income method fits. Projection, statements, or the appraisal schedule.
4. Have the report ordered, or run your own pre-offer version. Enter the address and unit details, then review the comp set.
5. Check the comps. The tool weights closer, similar properties more heavily. A condotel often competes with the hotel itself, so houses and apartments make poor matches.
6. Let the lender apply its adjustment. Lenders discount projections before using them. The discount differs by lender, so ask your broker rather than assume.
7. Divide by the full obligation. Adjusted monthly income goes over PITIA, HOA dues included.
What Is Inside the Report?
AirDNA’s description of the tool says it draws on similar nearby active listings, and its calculator also reports a Comp Set Strength score that shows how consistent revenue is across the comps. Higher strength means the comps agree with each other. A weak score is a warning that the comparison is thin or mismatched.
The same provider’s newer report format also bundles regulation-risk notes. That matters because local rules and HOA rules can override a strong projection. 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.
How Does a Projection Become a DSCR?
The math is simple. Take projected annual gross, apply the lender’s adjustment, divide by 12, then divide by PITIA. The result is your coverage ratio. Run it this way with your own numbers, using a modeled example.
Say the adjusted monthly income lands at 1.6 times the full monthly obligation. That is a 1.60 DSCR, a comfortable cushion. Now say the lender’s discount is steeper or the comps were generous, and adjusted income lands at 1.05 times the obligation. Same unit, thin margin. Now imagine the appraiser’s long-term rent schedule becomes the income figure and lands around 0.85 times. That is below 1.00 on long-term rent alone.
Where that happens, a few paths may exist. Select lenders in the network offer programs below 1.00 coverage, with leverage and terms adjusted. A larger down payment can lift coverage by shrinking the payment. Interest-only structures through select lenders can also change the ratio. Whether any of these apply depends on lender guidelines, credit, and property review.
On the standard short-term-rental programs, 1.00 is where select programs start on both purchases and refinances. A stronger ratio opens better pricing and leverage. Also remember that clearing 1.00 is not the same as positive cash flow. DSCR compares rent to PITIA only. Repairs, vacancy, management fees, utilities, and capital expenses sit outside it.
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.
Test Low, Base, and High Before You Offer
Run three versions before you go under contract. Use the base projection, then a conservative case with a steeper discount, then the appraiser’s rent schedule as a floor. If the deal only works in the optimistic version, treat that as the answer.
A 1.5 coverage ratio means income runs 50% above the debt obligation, and that cushion matters in short-term rental because income swings by season. A condotel makes the cushion more important, since high dues eat into coverage first.
Projections also run optimistic. One short-term-rental advisory blog argues that independent tests have found Rentalizer off from actual results, usually on the high side. Treat that as one opinion, not a measurement. The practical lesson is the same: do not size a deal to the best-case number.
Check the Report Before It Goes to Underwriting
Catching a bad input early saves a re-order. Go through this list:
- Unit inputs: bedrooms, baths, and capacity match the floor plan.
- Comp set: the comps resemble a hotel-style unit, not a house.
- Comp Set Strength: a weak score means ask for a corrected run or custom comps.
- Seasonality: the revenue curve fits the building’s location and amenities.
- Program fees: if the building splits revenue with an operator, confirm whether the projection is gross or net.
Operator revenue splits, owner-use limits, and resort fees change the gap between gross and net. Ask for the rental agreement before you assume the projection reflects what you would actually keep.
Where the General Rule Breaks
Mandatory rental pooling. If management controls occupancy and you must put the unit in a pool, many lenders hesitate. An owner-controlled rental is easier to place than a building where you cannot control the asset. Treat this as case by case.
A weak strength score is a reason to push back on the figure.
Existing history versus new purchase. An operating unit can document real income. A new purchase leans on projection. Some lenders restrict projection use to purchases only, so a refinance may call for actual statements.
Appraiser discretion. The 1007 was built for long-term leases. Appraisers vary in how they treat nightly income, so do not count on it to capture short-term potential.
Ineligible property types. Manufactured homes, log homes, and barndominiums are not offered in the network’s DSCR programs, however strong the income looks.
What If the Projection Comes In Low?
Start with the comps. A low number from a poor comp set is worth contesting. Then look at the structure. A larger down payment lowers the payment and can lift the ratio, but it never erases leverage caps, credit floors, reserve rules, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.
Next, look at the income method. Statements from the building’s rental program might beat the projection. Then consider the loan terms. The network’s spine is the 30-year fixed, and extended terms and interest-only periods are available through select lenders. Finally, accept that some condotels will not work. Walking away from a thin deal is a legitimate result.
Documents to Gather
Expect to assemble the appraisal, the condo or HOA questionnaire and budget, any rental-program agreement and statements, and proof of short-term rental permission, such as local registration or HOA documents.
What the Decision Looks Like in Practice
For purchases, short-term-rental programs in the network reach up to 75% LTV on the strongest files, with about a 640 minimum score and a 1.00 coverage floor on select programs. Cash-out and refinance files on short-term-rental collateral top out around 70% LTV, with a 1.00 floor of their own. Standard long-term rental cash-out runs closer to 75%. Reserves vary by lender, leverage, and loan size, commonly around six months of PITIA. Standard programs go up to $3,000,000. Every file is underwritten individually, and none of this is a commitment to lend.
For fundamentals, the complete DSCR loans guide walks through how the loans work.
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.
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, with DSCR programs in 41 markets, including Washington, D.C.
Frequently Asked Questions
Do I need operating history to get a projection report?
No. The report exists for units without history, because it estimates income from similar nearby listings. Standard short-term-rental files in the network expect about 12 months of hosting history, so a projection-based path runs through select lenders and depends on the program.
Who orders and pays for the report?
Usually the lender or broker orders it for the subject address. You can also pull your own to pre-screen a deal. Report access depends on the provider’s subscription plan, and who bears the cost varies by lender. Ask your broker before ordering.
Can I use a report I ran myself?
Sometimes. Whether a lender accepts a borrower-pulled report is a program-level decision. It is still useful before you make an offer, since it shows whether the deal can clear coverage at conservative assumptions.
Is the projection the same as my qualifying income?
No. Lenders typically discount the projection, and the appraiser’s rent schedule can serve as a fallback or cap. The adjustment differs by lender, which is why the same condotel can produce different ratios.
Will every lender accept a condotel?
No. Many lenders that take ordinary non-warrantable condos still treat condotels case by case, and agency programs generally exclude them. A broker who sees many lenders’ guidelines can match the building to a program that accepts it.
About Lendmire
As a non-QM mortgage broker (NMLS# 2371349), Lendmire facilitates DSCR investor loans across 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed around property-level rental income instead of personal income documentation, subject to lender guidelines, serving LLC-structured portfolios and self-employed borrowers who don’t fit conventional boxes. A two-time Scotsman Guide Top Mortgage Workplace (2025, 2026).
Investors focused on short-term rentals can review DSCR loans for Airbnb and short-term rentals.
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References
1. AirDNA Help Center – Rentalizer
2. Fannie Mae Selling Guide B4-2.1-03
3. Vault STR – Rentalizer accuracy
This article is part of Lendmire’s short-term rental loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Calculate DSCR on an Airbnb With No Operating History · AirDNA vs Airbnb Statements for a Condotel STR Loan · Personal Name vs LLC for a DSCR Airbnb Loan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.