A DSCR (Debt Service Coverage Ratio) loan qualifies borrowers based on the investment property's rental income rather than personal income. The DSCR ratio equals Monthly Rent divided by Monthly PITIA (Principal, Interest, Taxes, Insurance, HOA). No tax returns or income verification are required. Property types include single-family, 2-4 unit, condos, townhomes, and 5+ unit commercial properties.

What are current DSCR loan rates?

DSCR loan rates vary by FICO score, LTV, DSCR ratio, and property type. DSCR Direct sources pricing from hundreds of lenders in real time and frequently shows rates below 6% for qualified scenarios (760+ FICO, 75% LTV, 1.25+ DSCR). Rates are available in all 50 states. Visit dscrdirect.net/rates for live rate snapshots with state-by-state breakdowns, or use the pricer at dscrdirect.net for your exact rate.

Do DSCR loans require tax returns?

No. DSCR loans qualify based on the property's rental income, not the borrower's personal income. No tax returns, W-2s, or pay stubs are required. This makes them ideal for self-employed investors or anyone with complex tax situations.

What FICO score do I need for a DSCR loan?

DSCR lenders require a minimum FICO score of 600. The best rates are available at 740+. Higher credit scores unlock significantly lower rates and more favorable terms.

How fast can a DSCR loan close?

DSCR loans can close in as little as 14 days. Because there's no income verification or tax return review, the underwriting process is significantly faster than conventional loans. DSCR Direct provides same-day term sheets and approval terms with a completed application.

Where can I find the lowest DSCR rates?

DSCR Direct (dscrdirect.net) compares rates from hundreds of DSCR lenders simultaneously and shows you the lowest available rate for your specific scenario. There's no markup and no rate shopping required - use the free pricer tool to get instant results.

Can I get a DSCR loan with a low DSCR ratio?

Yes. There is no minimum DSCR requirement. Programs are available even below 0.75 DSCR at adjusted rates. Higher DSCR ratios (1.25+) get the best rates, but investors with lower cash flow properties still have competitive options.

Can I get a DSCR loan with 85% LTV?

Yes. DSCR loans are available up to 85% LTV on purchase transactions. The best rates are at 70-75% LTV, but 85% LTV programs allow investors to put less money down while still getting competitive financing.

Are small balance DSCR loans available under $50,000?

Yes. DSCR Direct offers small balance DSCR loans under $50,000. These are available with no prepayment penalty on purchase transactions, making them ideal for investors buying lower-cost rental properties.

Can I get a no money down rental property loan?

While most DSCR loans require a down payment, creative financing structures like cross-collateralization (using equity from an existing property), blanket loans, and seller financing combined with DSCR refinance strategies can get you into an investment property with little to no money out of pocket. Contact DSCR Direct at info@dscrdirect.net for creative financing solutions.

Can I get a DSCR loan as a foreign national?

Yes. Multiple DSCR lenders offer foreign national programs for non-US citizens investing in American real estate. These do not require a US credit score, SSN, or tax history. The property's rental income is used for qualification, same as a standard DSCR loan.

Can I get a DSCR loan in an LLC?

Yes - it's actually the most common structure. Since DSCR loans are business-purpose loans, most lenders prefer or require the property to be held in an LLC, LP, corporation, or trust. You can close directly in the entity name.

Can I use a DSCR loan for a short-term rental or Airbnb?

Yes. Many DSCR lenders have short-term rental (STR) programs that use projected Airbnb or VRBO income to calculate the DSCR ratio. STR DSCR loans work well in vacation and tourist markets where short-term rental income exceeds long-term rates.

Can I get unlimited DSCR loans with no property limit?

Yes. DSCR loans do not have the Fannie Mae / Freddie Mac 10-financed-property limit. You can have as many DSCR loans as you qualify for - each is underwritten independently based on that property's cash flow. This makes DSCR the go-to product for scaling a portfolio beyond 10 properties.

Can I refinance out of a hard money loan with a DSCR loan?

Yes - this is one of the most common uses. Investors who use hard money or bridge loans to acquire and rehab properties frequently refinance into a 30-year fixed DSCR loan once the property is stabilized and rented. Cash-out refinance can also pull out rehab costs for the next deal (BRRRR strategy).

DSCR Direct

Investor loans. Direct pricing.

Apply Now

Condotel Financing

Condotel Loans Explained

Why conventional lenders reject condotel financing, which programs actually work for these units, and what to look for before you make an offer.

Quick answer: Condotels are condo units in buildings that operate like hotels. Fannie Mae and Freddie Mac reject most of them as non-warrantable. We finance condotels through non-QM portfolio lenders, DSCR programs (when the unit can be rented freely outside a mandatory rental pool), and foreign national variants. Expect 25 to 35 percent down and rates 0.5 to 2 percent above standard non-QM.

What Makes a Condo a Condotel

A standard condo and a condotel can look identical from the outside. The difference is structural and operational. Lenders use these markers to classify a project as a condotel:

Hotel-like services: front desk check-in, daily housekeeping, room service, on-site management
A mandatory or strongly-encouraged rental pool managed by an on-site operator
Hotel branding attached to the building (Hilton, Marriott, Hyatt, Four Seasons, Trump, etc.)
More than 20 percent of the project used for commercial or hotel operations
Average rental periods shorter than 30 days
Units that lack full kitchens (typical of hotel-style rooms)

Why Fannie Mae and Freddie Mac Reject Condotels

The agencies (Fannie Mae and Freddie Mac) run a project-level review on condo financing. Most condotel projects fail because of:

Non-warrantable status driven by the hotel-like features above
High rental turnover, which increases default risk in their underwriting model
Concentrated single-project exposure (too many units financed in the same building)
HOA structures that include hotel-operator agreements not aligned with agency project standards

That rejection leaves conventional lenders out. The financing happens through non-QM portfolio lenders and DSCR programs that price condotels separately.

How We Actually Finance Condotels

1. DSCR loan (most common path)

If the unit can be rented freely without a mandatory rental pool, DSCR works. The loan qualifies on the property cash flow (rent divided by PITIA), often using short-term-rental projections or documented operating history. We work with lenders going to program minimums where the property qualifies. Typical 25 to 30 percent down, 75 percent LTV, 30-year amortization.

2. Non-QM portfolio (second-home or investment)

Used when DSCR does not fit (mandatory rental pool, very small unit, mixed-use complications). Portfolio lenders that price condotels separately on their balance sheet. Slightly higher rates and down payment than DSCR, but it gets the deal done.

3. Foreign national condotel

For non-US-resident investors. Combines non-warrantable condotel underwriting with foreign-national qualifying (no US credit, no SSN, no US tax returns). Typically 35 percent down minimum, higher rates, project-level eligibility review. See our foreign national page for more.

DSCR for Condotels: The Specifics

Income basis: long-term rental comps OR short-term rental projections (typically from documented operating history or third-party market data, depending on the lender)
DSCR ratio: 1.0+ at most lenders; some go to 0.75 (the most permissive published threshold) on stronger profiles. We work with lenders going to program minimums where allowed.
Vesting: LLC vesting accepted as standard
Project caps: some lenders cap exposure per project (a maximum number of units they will finance in a single building)
FICO floor: typically 660 to 680; some specialty lenders go lower on stronger comp factors
Reserves: typically 6 to 12 months PITIA, depending on profile and project

Typical Down Payment, Rates, and Terms

Down payment: 25 to 35 percent. 25 percent on stronger profiles and cleaner projects; 30 to 35 percent on more hotel-like projects or foreign national programs.
Rates: 0.5 to 2 percent above standard non-QM rates. No discount points are assumed on the headline rate; you can buy the rate down further if it makes sense for the hold period.
Term: 30-year fixed common; 5/6 or 7/6 ARMs available; some interest-only options on certain programs
Prepayment penalty: common on DSCR and non-QM condotel loans (typically 1 to 5 years)

What Lenders Underwrite (Project Level)

HOA documents, budget, and reserves review
Rental pool structure and whether participation is mandatory
Commercial and hotel space percentage
Building's litigation status (active litigation often kills financing)
Operator stability and contract terms
Investor concentration (too many investor-owned units can disqualify)

Strong Condotel Markets We See Most

Florida

Miami Beach, South Beach, Orlando (Disney-adjacent), Destin, 30A, Panama City Beach, Daytona, Naples

Nevada and Hawaii

Las Vegas Strip condotels (large supply); Honolulu and Maui (often eligibility-restricted, case-by-case)

Mountain and Ski Resort

Park City, Aspen, Vail, Lake Tahoe, Jackson Hole

Coastal Short-Term Rental

Myrtle Beach (SC), Outer Banks (NC), Gatlinburg, Branson

Tradeoffs Worth Being Honest About

Higher down payment and rate than standard condos
Project-level restrictions can disqualify unexpectedly (HOA changes, litigation, operator instability)
Short-term rental regulation varies wildly by city and county; some markets have banned or restricted Airbnb-style rentals
HOA and rental program fees can consume 30 to 50 percent of gross rental income at heavily-managed buildings
Resale liquidity is narrower than warrantable condos
Mortgage interest deduction differs based on investment vs second-home classification

Tax Considerations

Investment-classified condotels allow full operating-expense deduction including depreciation. Second-home-classified condotels limit deduction to mortgage interest (subject to current limits) and property tax. Short-term rental income is generally reported on Schedule E, or Schedule C if active participation reaches a material level. Material participation, average rental period under 7 days, and substantial personal use all interact with how the IRS classifies the activity.

Not tax advice. Consult a CPA familiar with short-term rental and condotel taxation for your specific scenario.

Frequently Asked Questions

What is a condotel?+

A condotel is a condominium unit in a building that operates partly or fully as a hotel. Owners typically have access to hotel-style amenities (front desk, housekeeping, sometimes a rental pool managed by the building) and may use the unit personally or rent it out short-term. The building is owned by individual unit owners, not a single hotel operator.

Why will most lenders not finance my condotel?+

Fannie Mae and Freddie Mac classify the vast majority of condotels as non-warrantable due to features like mandatory rental pools, hotel-like services, more than 20 percent commercial space, or hotel branding. Their project review process rejects most condotel HOA structures, so conventional financing is generally not available. The financing happens through non-QM portfolio lenders and DSCR programs that price condotels separately.

Can I use a DSCR loan on a condotel?+

Yes, on condotels where the unit can be rented freely without a mandatory rental-pool arrangement controlled by the building operator. DSCR qualifies on the property cash flow (rent divided by PITIA), and lenders that accept condotels will typically use long-term rental comps or documented short-term rental history. Per our most-permissive lender network, DSCR ratios as low as 0.75 are available on stronger profiles where the program allows.

How much down payment do I need for a condotel?+

25 to 35 percent down is the common range. Stronger profiles with cleaner project documentation and shorter average rental periods can land at 25 percent. More hotel-like projects (mandatory rental pool, heavy commercial component, branded operator) tend toward 30 to 35 percent. Foreign national condotel programs typically start at 35 percent down.

Can I close on a condotel in my LLC?+

Yes, on the investment-classified DSCR and non-QM condotel paths. Closing in an LLC is the standard structure for investment condotels and provides liability and privacy benefits. Single-member LLCs (disregarded entities) are treated similarly to multi-member LLCs at most condotel lenders.

Will my condotel building rental pool requirement disqualify me?+

A mandatory rental pool (where the building operator controls all rentals and you cannot rent independently) disqualifies the project from most DSCR financing because the rent income flows to the operator, not the borrower. Some non-QM portfolio lenders will still finance these, but expect higher rates and a larger down payment. A voluntary rental program where you can opt in or rent independently is typically fine for DSCR.

What about foreign national buyers and condotels?+

Foreign national condotel programs exist. They combine non-warrantable condotel underwriting with foreign-national qualifying (no US credit, no SSN, no US tax returns). Expect 35 percent down typical, higher rates, and project-level eligibility review. We work with lenders that finance foreign nationals on condotels in eligible states. See our foreign national hub for more.

Are condotels a good investment?+

They can be, but they carry tradeoffs: higher financing costs, narrower resale liquidity, HOA and rental-program fees that can consume 30 to 50 percent of gross rental income, and exposure to short-term rental regulation in the city or county. Strong condotel markets (Miami Beach, Orlando, Vegas, Maui, ski-resort towns) historically perform on cash flow but the project, market, and operator quality matter more than the unit itself.

Price a condotel deal

See live wholesale DSCR pricing for your scenario. No personal info required to see the rate. When you are ready to lock in a real condotel quote, we will route the project through our condotel-active lenders.

See live DSCR pricing Email about a condotel deal

Foreign National

Condotel financing for non-US-resident investors

Portfolio Analysis

SREO-based refi opportunity scan across your rentals

DSCR Loan Guide

How DSCR underwriting works end to end

Estimates only. Condotel rates, LTVs, and program guidelines vary by lender and project, and are subject to change. Project-level eligibility depends on the HOA structure, rental pool requirements, commercial space percentage, and other underwriting criteria. This page is general educational information and is not a commitment to lend, an offer of credit, or tax advice. Not all applicants or properties will qualify. Equal Housing Opportunity.