Updated
Scenario assumptions
| Location | Navy Yard, Washington, DC (Ward 6) |
|---|---|
| Property type | Illustrative Navy Yard two-bed, two-bath condo with one garage space |
| Loan type | Modeled DSCR condo purchase loan, 30-year fixed |
| Loan amount | $373,750 modeled (65% LTV) |
| Close time | 18 business days modeled after condo questionnaire approval |
What this Navy Yard scenario tests
This is an illustrative financing scenario, not a completed Jaken Finance Group loan. Every number here is an assumption. The example shows how condo dues, building approval, and DC rules shape a DSCR loan on a Navy Yard unit.
Navy Yard is one of DC’s newest neighborhoods. It sits along the Anacostia River next to Nationals Park, with Green Line Metro access and a steady supply of amenity-rich condo and apartment buildings. Renters pay a premium for the location. Condo owners also pay a premium, in the form of monthly association dues.
The modeled investor buys a two-bed, two-bath condo with a garage space. It is rent-ready, so there is no renovation and no bridge loan. The investor uses a DSCR loan, which qualifies on the unit’s rent instead of the buyer’s personal income.
The question is how much a condo’s HOA dues change the leverage a rental loan can support. For current program terms, see DSCR loans for Washington, DC condos and the Navy Yard DSCR page.
Unit and building assumptions
| Item | Assumed figure |
|---|---|
| Purchase price | $575,000 |
| Monthly market rent (12-month lease) | $4,000 |
| Monthly HOA dues | $720 |
| Annual property tax | $4,887.50 |
| Condo unit insurance (HO-6) | $540 per year |
The HOA dues in this model cover building insurance, amenities, water, staffing, and reserve contributions. Dues vary widely across Navy Yard buildings. Always get the current budget and the most recent reserve study before you model a unit.
DC taxes Class 1 residential property at $0.85 per $100 of assessed value. A rental unit does not receive the homestead deduction, so the model applies that rate to the full price.
Why the first offer did not qualify
The investor’s first plan was 25% down. That is where most condo buyers start. The rate is modeled at 7.25% on a 30-year schedule, inside Jaken Finance Group’s DSCR range of 5.75%–10.5%. Condo files sometimes price slightly higher than single-family homes.
| Payment line | 75% LTV | 70% LTV | 65% LTV (chosen) |
|---|---|---|---|
| Loan amount | $431,250 | $402,500 | $373,750 |
| Principal and interest | $2,941.90 | $2,745.77 | $2,549.65 |
| Property tax | $407.29 | $407.29 | $407.29 |
| HO-6 insurance | $45 | $45 | $45 |
| HOA dues | $720 | $720 | $720 |
| Total monthly payment | $4,114.19 | $3,918.06 | $3,721.94 |
| DSCR ($4,000 ÷ total) | 0.97 | 1.02 | 1.07 |
At 75% LTV the rent does not cover the payment. At 70% it barely clears 1.0, with no room for a dues increase. At 65% the file has a small cushion. The investor chose 65%.
Put another way, the $720 monthly fee costs about as much borrowing power as $105,000 of loan principal at this rate. That is why condo investors should model dues first, not last.
Cash needed at closing
| Closing item | Modeled amount |
|---|---|
| Down payment (35%) | $201,250 |
| DC deed recordation tax, buyer side (1.45%) | $8,337.50 |
| Origination (1 point) | $3,737.50 |
| Condo questionnaire and HOA transfer fees | $600 |
| Title, appraisal, and legal | $4,800 |
| Cash to close | $218,725 |
| Recommended reserves (six months of payments) | ~$22,330 |
DC applies a 1.45% recordation tax and a 1.45% transfer tax on residential sales of $400,000 or more. Buyers usually pay recordation. Sellers usually pay transfer.
Deal timeline
| Week | Milestone |
|---|---|
| 1 | Offer accepted; HOA budget, bylaws, and reserve study requested |
| 2 | Condo questionnaire sent to building management |
| 3 | Questionnaire returned; building reviewed for loan eligibility |
| 4 | Appraisal with rent schedule ordered |
| 5 | Appraisal back; HO-6 policy bound |
| 6 | Loan closes in 18 business days (modeled) |
| 7–9 | Unit listed for rent; 12-month lease signed |
The building review lenders run
A condo loan depends on the building as much as the unit. Before approving a Navy Yard condo, lenders typically review:
- Owner-occupancy and investor concentration. Buildings with many rentals or one owner holding a large block of units draw more scrutiny.
- Reserve funding. Many programs look for reserve contributions near 10% of the annual budget.
- Delinquent dues. A high share of owners behind on dues signals budget stress.
- Pending litigation. Construction defect lawsuits can delay or block approval.
- Commercial space. Ground-floor retail is common in Navy Yard. A large commercial share can affect eligibility.
- Special assessments. Any planned or recent assessment should be disclosed and modeled.
Buildings that fail these tests are called non-warrantable. Some DSCR programs still lend on them, usually with a larger down payment or higher rate. Start the questionnaire in week one. It is often the slowest item in a condo closing.
Cash flow after closing
Coverage above 1.0 means the loan qualifies. It does not mean the unit makes money.
| Line | Self-managed | Professionally managed |
|---|---|---|
| Monthly rent | $4,000 | $4,000 |
| Vacancy (5%) | −$200 | −$200 |
| Maintenance (3%, HOA covers exterior) | −$120 | −$120 |
| Management (8%) | $0 | −$320 |
| Total monthly payment | −$3,721.94 | −$3,721.94 |
| Monthly cash flow | −$41.94 | −$361.94 |
The self-managed unit is close to breakeven. Rent would need to reach about $4,050 to cover the payment with reserves funded. Principal paydown adds roughly $3,600 in year one, so the owner’s net worth still grows.
Other loan structures the investor compared
Putting 35% down was not the only way to clear 1.0. The investor priced three structures side by side. All include the same tax, HO-6, and HOA lines.
| Structure | Loan | Total monthly payment | DSCR | Down payment |
|---|---|---|---|---|
| 65% LTV, 30-year fixed at 7.25% (chosen) | $373,750 | $3,721.94 | 1.07 | $201,250 |
| 65% LTV, rate bought down to 7.00% | $373,750 | $3,658.86 | 1.09 | $201,250 plus buydown cost |
| 70% LTV, 10 years interest-only at 7.50% | $402,500 | $3,687.91 | 1.08 | $172,500 |
The interest-only option saves $28,750 at closing and still clears 1.0. It has two costs. The owner builds no loan paydown for ten years. And when the interest-only period ends, the payment resets to about $4,415 a month to pay off the loan over the remaining 20 years. At today’s rent, that is coverage near 0.91. Not every program offers interest-only on condos, and some qualify it on the full payment.
The buydown saves about $63 a month. If it costs one point, or $3,737.50, it takes about 59 months to earn back. The investor did not expect to hold that long at the original rate, so it chose the plain 30-year loan.
Modeled first-year operating statement
The unit leases in week 8, so the owner collects about 11 months of rent in the first year after closing. Leasing fee and license costs are assumptions.
| Line | Year one |
|---|---|
| Rent collected (11 × $4,000) | $44,000 |
| Leasing agent fee (assumed half a month) | −$2,000 |
| Maintenance (3% of rent) | −$1,320 |
| Rental license and misc. (assumed) | −$400 |
| Loan payment, tax, HO-6, and HOA (12 × $3,721.94) | −$44,663.28 |
| Net cash flow | −$4,383.28 |
| Principal paydown | +$3,617 |
| Change in owner position before appreciation | about −$766 |
Year one is the weakest year. A full 12 months of rent in year two lifts collected rent by $4,000, and there is no leasing fee. The $22,330 reserve covers the year-one gap about five times over.
The investor accepted a near-breakeven hold for three reasons: a low-maintenance asset, strong rental demand near the ballpark and Metro, and a belief that DC condo prices had already corrected. Our article on the DC condo correction covers that thesis in more detail.
DC rules that affect a condo rental
- Short-term rentals. DC limits short-term rentals to the host’s primary residence. An investor unit cannot rely on nightly rents.
- Lease minimums. Many condo bylaws require leases of six or twelve months. Read them before assuming mid-term furnished rent.
- Rental license. DC requires a Basic Business License for rental housing, including a single condo unit.
- Rent stabilization. Newer buildings are often exempt under DC’s rent stabilization law. Confirm the exemption for the specific building with counsel.
What could break this scenario
- Dues increase. A 10% increase adds $72 a month and drops coverage to about 1.05.
- Special assessment. A $15,000 assessment equals roughly 21 months of the building’s current dues on this unit.
- Rent softness. New apartment deliveries nearby compete directly with condo rentals. At $3,800 rent, coverage falls to about 1.02.
- Building loses eligibility. Litigation or low reserves can make a future refinance harder.
Before you copy this structure
Get the HOA budget, reserve study, and bylaws before you model a Navy Yard condo. Count HOA dues in every payment calculation. Test at least three leverage levels, and expect a larger down payment than a rowhouse would need.
If you are comparing property types, see the Anacostia DSCR hold example for a two-unit rowhouse with no HOA. For value-add condo plays, read hard money loans in Navy Yard. Run your own unit through the DSCR calculator.
Ready to test a real unit? Submit your scenario or call (833) 264-7776.
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- Investment property financing Washington DC
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