The Quick Read: A non-warrantable condo on a DSCR purchase typically requires at least 25% down. Through select programs in Lendmire’s wholesale network, the cap on that property type is 75% of the price, and the cap does not move with a stronger credit score or coverage ratio, subject to underwriting. For founders, meaning business owners whose income arrives as distributions, equity, or uneven pay, the loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. The down payment is the one number your personal income cannot change.
- The minimum down payment is 100% minus the maximum leverage for the property type, which is 75% on a purchase of a non-warrantable investment condo.
- Condotels, which are hotel-style condo projects, carry the tightest terms: 75% leverage on a purchase and 65% on a refinance.
- Extra equity beyond the minimum is optional, and it can lift a thin coverage ratio.
- The building’s problem decides whether you get a loan at all. Your cash decides how much you put in.
- Founders should plan three cash buckets: equity, reserves, and closing costs. Reserves run 12 months of the monthly obligation for first-time investors. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Key Terms Defined
DSCR (debt service coverage ratio) is monthly rent divided by the full monthly obligation, which covers principal, interest, taxes, insurance, and any association dues. A result of 1.00 means rent covers the payment exactly.
LTV (loan-to-value) is the loan amount as a percentage of the price or value. The down payment is the part LTV leaves out.
Warrantable condo is a building that passes the standard checks the big mortgage-buying agencies apply to condo projects. A non-warrantable condo is one that fails at least one of those checks.
Reserves are liquid funds you keep after closing, counted in months of the monthly obligation on the subject property.
Condotel is a condo project run like a hotel, with front-desk services, a rental pool, or a short-term rental program built into the building.
Interest-only period is a stretch when the payment covers interest alone, which makes the monthly obligation smaller for coverage purposes.
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Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Oct 15, 2026
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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.
What Makes a Condo Non-Warrantable?
A condo is non-warrantable when the building fails the agencies’ project checks, whatever the strength of the unit or the buyer. HomeBuyer.com explains that the term is defined by exclusion: a building that does not meet the standards is non-warrantable. One failed test is enough, and every unit in the project carries the label.
That is why the label says nothing about your credit or your unit’s condition. It describes the project.
DSCR loans are not sold to those agencies, so the agency tests do not bind the lender. Each lender in the wholesale network sets its own condo policy, and many still review the project closely. The reason a building fails matters here, because some reasons only change the equity requirement and others can end the file.
| Trigger | What it means | Usually affects |
|---|---|---|
| High investor or renter share | Too few owner-occupants | Eligibility and equity |
| One owner holds many units | Concentration in one hand | Eligibility |
| Thin reserves or heavy dues delinquency | Association is short on cash | Eligibility |
| Active litigation | Lawsuit against the association | Eligibility, often a stop |
| Commercial space or unsold units | Mixed use or unfinished sales | Eligibility |
| Hotel-style operation | Front desk, rental pool, nightly stays | Category and equity |
| Pending special assessments | Large unpaid building repairs | Eligibility and reserves |
On the single-owner trigger, HomeBuyer.com cites a threshold of 20% of units under one owner. Structural litigation with no firm repair cost is the usual deal-ender, because the lender cannot size the risk.
What Sets the Non-Warrantable Condo DSCR Down Payment?
The down payment is not a standalone rule. It is the result of the maximum LTV for the property type, plus any overlays for loan size, credit, and rental strategy. The cap sets the minimum cash equity.
Across the wholesale network Lendmire places files with, non-warrantable condos run to 75% on a purchase and to $1,500,000 in loan size, subject to underwriting. That means 25% down at the floor. A few comparison points make the structure clear. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
| Property and transaction | Max leverage | Minimum equity |
|---|---|---|
| Non-warrantable condo, investment purchase | 75% | 25% |
| Condotel, investment purchase | 75% | 25% |
| Condotel, investment refinance | 65% | 35% |
| Interest-only structure | 75% ceiling | 25% |
Each figure is a ceiling through select programs, not a promise, and every file is underwritten individually. Market-wide, HomeBuyer.com reports that non-warrantable condos usually need a larger down payment, typically 20% or more. The network figure for an investment purchase is the 25% shown above.
Two details trip up new investors. First, the credit score does not shave the minimum. A 760 score earns the same leverage cap on this property type as a 700, though a score below a band’s threshold can push you into a lower leverage cell. Second, a high coverage ratio also leaves the cap alone. It helps approval and terms, but it does not buy a smaller down payment.
Credit still matters at the edges. The program floor is 660. In the band from $1,000,000 to $1,500,000, the credit needed for 75% leverage on a purchase is 700 or better. A lower score inside that band takes a lower leverage cell, and that means more cash down. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
How Does One Condo Run Through the Math?
Run the numbers on a condo bought at 75% leverage on an investment purchase. Assume, as a modeled input and not market data, that rent covers the full monthly obligation at roughly 1.05x. That includes principal, interest, taxes, insurance, and association dues. It clears 1.00, so the file can move forward on coverage, subject to lender guidelines.
Now put 30% down instead, which means 70% leverage. The loan shrinks by about a fifteenth, so the principal and interest share of the payment falls with it. Coverage in this modeled case climbs toward roughly 1.10x. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
The gain is smaller than the loan reduction suggests. Taxes, insurance, and association dues do not shrink when the loan does. On a condo, dues can be a large slice of the obligation, so extra equity helps coverage less than it would on a house with no dues. That is the honest answer to whether more equity is worth it.
Extra equity earns its place in three situations:
1. Coverage lands just under 1.00. Select lenders in the network will review coverage below 1.00, but LTV and terms adjust, subject to underwriting. More equity strengthens that request.
2. You want a cushion if dues or assessments climb.
3. Your cash is idle and your reserves are already funded.
It does not earn its place when the extra money would drain your reserves. A thin cushion after closing is a bigger risk than a slightly higher monthly obligation.
Interest-only structuring is the other lever. The network’s interest-only option runs 120 months on 30- and 40-year terms, caps at 75% leverage, and is reviewed on the interest-only payment with coverage of 0.75 or better. Since the non-warrantable condo cap is already 75%, this option fits the property type. Interest-only can lift coverage without extra cash down, though it does not reduce what you owe. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
The Stacked Cash-to-Close Picture
Most pages list down payment, reserves, and costs separately. You need one number, so stack three buckets.
- Equity: at least 25% of the price on a non-warrantable condo purchase, subject to underwriting.
- Reserves: 6 months of the monthly obligation on the subject property, or 12 months for first-time investors.
- Closing and third-party costs: appraisal, condo questionnaire, title, and entity setup. These vary by file and property.
A founder buying a first rental should plan on the 12-month reserve figure. The reserve is a second down payment in practice, and it must be liquid.
Why Does the Number Move?
Credit, Coverage, and Rental Strategy
Several inputs change the outcome. Only some change the minimum cash.
| Input | Changes minimum equity? | What it does |
|---|---|---|
| Credit score | Only below a band’s threshold | Lowers leverage inside that band |
| Coverage of 1.00 or higher | No | Earns full leverage for the property type |
| Coverage below 1.00 | Yes, through select programs | LTV and terms adjust, subject to underwriting |
| Loan size | Yes | Leverage steps down as balances rise |
| Condotel status | Yes | Tighter purchase and refinance caps |
Strategy matters too. Short-term rentals qualify at coverage of 1.00 or higher, with income counted at 80% of gross. That income comes from the appraisal’s short-term-rent analysis on a purchase, or twelve months of operating history on a refinance. The path is open to experienced investors only, meaning twelve months owning income property in the last thirty-six. A first-time founder will usually not qualify for it. 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. A condo association can ban nightly stays even where the city allows them.
For loan amounts, the program runs from $150,000 to $1,500,000 on non-warrantable condos. A very small purchase may sit below the loan-size floor, and a high-end unit may sit above the cap.
What Changes for Founders?
A founder’s problem is rarely the 25%. It is proving where the money came from and how the file reads without a steady paycheck.
DSCR loans qualify primarily on property-level rental income covering the payment, subject to lender guidelines. That helps a founder whose personal income swings with a funding round or a stock sale. The lender still looks at credit, reserves, and the source of your funds.
Here is how that plays out in practice:
- Funds from the business. Distributions or owner draws can fund equity, but the lender will want documentation showing the money is yours to move. Mixing personal and business accounts makes the paper trail harder to read.
- Proceeds from a sale or exit. Sale proceeds work when they are visible in your account and the source is documented. Lenders ask for the sale paperwork and the deposit trail.
- Illiquid equity. On most files, shares or options you cannot sell do not count toward reserves. Reserves need to be cash or near-cash.
- Gifts and borrowed funds. Treatment varies by program. Ask before you wire anything, not after.
Entity vesting is welcome through select programs, with no layered entities, subject to lender program eligibility. Many founders prefer to hold a rental in an LLC. 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.
One practical point: a new investor is a first-time investor for reserve purposes, even if the founder is experienced in business. The 12-month reserve test follows rental ownership history, not business success. The complete DSCR loans guide covers the full qualification picture, and Lendmire’s piece How Non-Warrantable Condo DSCR Rules Work for an Out-of-State Rental Investor covers the remote-owner angle.
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.
Where the General Rule Breaks
Rules of thumb fail at the edges. These are the edges that matter.
Condotels. Hotel-style projects run on tighter caps than a plain non-warrantable condo. The purchase cap is 75%, while the refinance cap drops to 65%, which leaves 35% equity. A founder who buys now and refinances later should expect the equity bar to rise.
A warrantable building can flip. A building that passes today can fail after a lawsuit, a surge in investor ownership, or a large special assessment. That affects your exit and any later refinance, because your buyer faces the same smaller lender pool. If you want to see what the standard checks look like in the first place, Lendmire’s explainer What Is a Warrantable Condo? Financing Rules Investors Must Know is the baseline.
The agency side has moved. In a recent condo lender letter, Fannie Mae retired its 50% investor-concentration limit for established projects under full review. It retired the limited review process as well. The same letter keeps the presale requirement, under which at least 50% of units must be conveyed or under contract to principal-residence or second-home buyers.
Two lessons follow. A building that failed only on investor share may now pass the agency test, so ask whether the label still applies. But lenders can keep their own investor rules, as the Michigan Community Association Law Blog notes, and single-investor ownership limits remain. A DSCR lender decides for itself. Old articles that still treat the 50% rule as current are stale.
Some problems block DSCR too. Active structural litigation with an uncertain repair bill is the clearest example. Some DSCR lenders will take a building the agencies reject, but none of them will take every building.
Stale forum advice. Older investor threads claim only owner-occupied loans or adjustable products work on these condos. That is outdated for DSCR financing. Many DSCR lenders now treat warrantable and non-warrantable investment condos alike on eligibility, though leverage and the lender’s own project review still differ.
What Should You Request Before You Make an Offer?
Ask the association or management company for these items early, because each answer feeds the lender’s view of the building.
1. Condo questionnaire and operating budget. Shows owner-occupancy mix and the association’s cash position.
2. Financial statements and reserve study. Thin reserves point to future assessments.
3. Master insurance policy. Confirms the building carries adequate coverage.
4. Meeting minutes. Reveal disputes, planned repairs, and talk of assessments.
5. Litigation disclosures. A pending suit is the item most likely to stop the file.
6. Special-assessment notices. Unpaid assessments raise the monthly obligation and reduce coverage.
7. Rental rules. Rental caps, minimum lease terms, and short-term bans decide your income plan.
8. Delinquency and investor-share data. Shows how the building compares with typical lender limits.
Spend a few minutes sorting the answers into three piles: fine, fixable, and a stop. Litigation and heavy assessments tend to land in the stop pile. A high investor share often lands in the fixable pile, depending on the lender.
Frequently Asked Questions
Can a non-warrantable condo get a DSCR loan?
Often, yes, through select lenders in the wholesale network, subject to underwriting. The agency tests do not bind a DSCR lender, but the lender still reviews the project. A building with active structural litigation or severe reserve problems may not be eligible at any lender.
How much do you put down on a non-warrantable condo with a DSCR loan?
Typically at least 25% on an investment purchase, because the maximum leverage on this property type is 75%, subject to underwriting. Condotels follow the same 25% on a purchase and require 35% equity on a refinance. Market surveys report minimums of 20% or more for non-warrantable condos in general, and the network figure for a DSCR investment purchase is the 25% above.
Does a better credit score or higher coverage lower the down payment?
Not on this property type. They help approval and terms, but the leverage cap holds. A score below a band’s threshold can push leverage lower. More equity, in turn, can help a thin coverage ratio.
Can I buy a non-warrantable condo through an LLC?
Often, yes. Name the entity before you make an offer, because the title and the loan need to match.
Do founders with uneven income qualify?
The loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines, so uneven personal income is less central. Credit, reserves, and the source of your funds still matter. First-time investors carry 12 months of reserves, and short-term rental income is limited to experienced investors.
What to Do Next
Start with the building, not the loan. Get the questionnaire and the litigation disclosures, and ask the association whether the project is warrantable today. Then fix your cash stack: at least 25% equity, 12 months of reserves if this is your first rental, and room for closing costs. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
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. Lendmire is a mortgage broker arranging business-purpose investor financing through select lenders in 41 markets, including Washington, D.C. Reach the team at 828-256-2183. The calculator on this page gives an illustrative estimate only, and nothing here is a commitment to lend.
A condo’s association paperwork tells you more about your down payment than your own bank statement does.
Lendmire’s self-employed mortgages page presents both super jumbo programs, bank statement and DSCR, side by side.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage brokerage specializing in DSCR investor loans, helping arrange financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. The model centers on property-level rental income reviewed by the lender rather than W-2 documentation, subject to lender guidelines, suiting entity-owned and multi-property investors. Lendmire holds Scotsman Guide Top Mortgage Workplace recognition for 2025 and 2026.
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References
1. HomeBuyer.com, Non-Warrantable Condominium
2. Fannie Mae condo lender letter
3. Michigan Community Association Law Blog
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 Condotel Income Rules Work for Short-Term Rental Owners · How Interest-Only DSCR Loans Work on High-Value Rentals · How Super Jumbo DSCR Dual Appraisal Rules Work on Luxury Rentals
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.