Can I get a DSCR loan on a condo?

THE NUMBERS

ILLUSTRATIVE — published program floors, not a quote or a commitment to lend. Subject to underwriting, appraisal and final credit approval.

What does warrantable actually mean?

Warrantable means the project meets the agencies' project standards, and lenders test broadly the same things: how much of the building is owner-occupied, how much of it any single entity owns, whether the association is in litigation, whether reserves are funded at a reasonable share of the annual budget, how much of the floor area is commercial, and whether delinquent dues are running high. Fail one of those and the project is non-warrantable, which closes agency financing. Thresholds and tolerances differ between lenders, so a project rejected by one desk is not automatically dead at the next.

Can I finance a non-warrantable condo?

In the private market, generally yes — that is much of what private DSCR lending exists for. Investor-heavy buildings, condotels in resort markets, projects with a large single owner, associations with an open lawsuit or a thin reserve line: each is a case-by-case underwrite rather than an automatic decline. Expect the review to be closer, the leverage to be more conservative on the weaker projects, and the association documents to matter more than the unit itself. Tell the desk what the issue is up front; it costs less time than discovering it in the questionnaire.

How do HOA dues affect my DSCR?

Directly and fully. The A in PITIA is the association dues, so every dollar of monthly fee reduces the ratio just as a mortgage payment dollar does. On a $2,150 rent with a $385 monthly fee, that fee alone consumes about eighteen percent of the gross rent before taxes, insurance or debt service. This is why a cheap condo with an expensive association can fail a DSCR test that a more costly single-family house passes. Use the current dues figure, not last year's, and ask whether an increase has been voted.

What about special assessments and reserves?

Both get read. A special assessment already levied is a known cost and underwriting will want the notice, the amount, the term and who is responsible for it at closing. A thin reserve fund is a signal that one is coming. Several states have tightened structural inspection and reserve-funding requirements for condominium associations in recent years — Florida's rules changed materially after 2021 — and the practical effect for an investor is higher dues, more assessments and closer lender scrutiny. What applies to your building is a question for the association and your attorney.

Can I short-term rent the unit?

Only if the bylaws and the local ordinance both allow it. Plenty of associations set a minimum lease term — thirty days, six months, a year — which quietly rules out nightly rental regardless of what the city permits, and some ban rental to a corporate entity altogether, which matters when your loan closes in an LLC. Underwriting reads the rental provisions of the declaration for exactly this reason. If the unit cannot legally operate as a short-term rental, it is underwritten on long-term rent instead.

A worked example — a condo where the dues decide it

A 1.09 DSCR sits in the 1.00–1.19 band, adding 25 basis points and moving the working rate to 7.125% — the payment rises again and the ratio settles near 1.07. Without the $385 association fee the same unit would price above a 1.30 DSCR. The dues are the deal here, which is why the desk asks for the current figure and the budget behind it. Illustrative only.

WHAT WE NEED FROM YOU

• Condo questionnaire. Completed by the association or its management company.
• Association budget and reserve position. Current year, with the reserve line visible.
• Master insurance policy. Plus your own unit (HO-6 style) policy.
• Declaration and bylaws. Specifically the rental and minimum-lease provisions.
• Special assessment notices. Any levied, pending or voted.
• Lease or market rent evidence. In-place lease, or the appraiser's rent schedule.
• Entity documents. Articles, operating agreement and EIN letter.

FREQUENT QUESTIONS

Does a condo cost more than a house on a DSCR loan?

Slightly — 12.5 basis points over the equivalent single-family cell on the current sheet.

Will you lend on a non-warrantable condo?

Case by case. Investor-heavy and single-owner-concentrated projects are common in private lending; litigation and reserves get the closest look.

Are HOA dues really counted against me?

Yes, in full. They are the A in PITIA and reduce the DSCR dollar for dollar.

What if a special assessment is announced during underwriting?

Tell the desk immediately. It changes the carrying cost and sometimes the leverage, and it is far easier to price before closing than to explain afterwards.

Can the association block a sale to my LLC?

Some declarations restrict entity ownership or grant a right of first refusal. That is a legal question for your attorney and it is worth asking before you go under contract.

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