The Quick Read: Usually 20% to 25% of the purchase price on most files, which matches a loan-to-value (LTV) of 75% to 80%, meaning the loan as a share of the price. Select high-leverage programs reach 85% LTV, or about 15% down, but they typically want a score near 700 or higher. Montana has no special down payment rule, so the standard purchase tiers apply here as they do everywhere else.
- Typical purchase: 75%–80% LTV, so 20%–25% down, subject to lender guidelines.
- Best-case leverage: 85% LTV on a purchase through select programs, generally with a 700+ score.
- Cash-out refinance: tops out around 75% LTV on a standard rental, so you leave roughly 25% equity in the property.
- Cash needed at closing: the down payment plus closing costs plus reserves, not the down payment alone.
- Zero down: not a real DSCR option. Equity is the trade for skipping personal income documentation.
What Sets the Down Payment on a Montana DSCR Loan?
The lender’s maximum LTV sets it. Your down payment is the price (or appraised value, if lower) minus the loan the lender will make against it. At 75% LTV you put down 25%. At 80% you put down 20%. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
DSCR Calculator
Run the numbers in Montana
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 own rent or nightly figures, taxes, insurance, and HOA for a more accurate picture.
Program parameters update from Lendmire’s centralized guideline source. Taxes and insurance are editable estimates.
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.
That maximum is a ceiling, not an approval. Credit score, loan size, property type, rent strength, and reserves can all pull the ceiling down on your specific file. Across the wholesale network Lendmire works with, most purchase files land at 75% to 80% LTV. The 85% tier exists, but it is reserved for the strongest borrowers. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Nothing federal sets this number. DSCR loans are non-QM investment-property mortgages, so each lender picks its own equity requirement. Scotsman Guide, a non-QM trade publication, notes that requirements vary from lender to lender. Many lenders want a meaningful down payment to keep the loan size and payment lower.
Montana adds no statutory layer on top of that. The state does not have its own DSCR down payment rule, and the network carries no Montana-specific LTV overlay. A rental in Missoula, Billings, or Kalispell faces the same standard purchase tiers as one anywhere else. Individual lenders can still treat a rural or resort-area property more strictly, so a file in a remote county may get a closer look than one in a town with plenty of comparable sales.
Key Terms Defined
- DSCR (debt service coverage ratio): monthly rent divided by the monthly payment on the property. A ratio of 1.00 means the rent just covers the payment.
- PITIA: principal, interest, taxes, insurance, and any HOA dues, which together make up the monthly payment in the ratio.
- Non-QM: a loan that does not follow standard owner-occupied mortgage documentation and is underwritten under the lender’s own guidelines.
- Reserves: cash or liquid assets you still hold after closing, counted separately from the down payment.
- Cash-out refinance: a new loan on a property you already own, sized above the old payoff so you can take equity out.
- Seasoning: the waiting period a lender wants between buying a property and refinancing it.
How Much Down Payment Fits Each Scenario?
The table below shows the typical ranges by transaction. These are typical wholesale-network ranges, not guarantees, and each file is reviewed individually.
| Scenario | Typical max LTV | Down payment or equity left in |
|---|---|---|
| Standard purchase | 75%–80% | 20%–25% |
| High-leverage purchase (700+ score) | Up to 85% | About 15% |
| Short-term rental purchase | Up to 75% | At least 25% |
| Cash-out, standard rental | Around 75% | About 25% |
| Cash-out, short-term rental | Around 70% | About 30% |
Two notes on the table. First, the 85% tier is a select-program tier, so treat it as the exception. Second, the short-term-rental rows are tighter than the standard rows. A 70% ceiling applies to cash-out on short-term-rental collateral, while 75% applies to cash-out on a standard rental.
Market surveys also report wide swings. One example cited by Scotsman Guide has a lender capping purchase LTV at 85% below a $1 million loan and 65% above it. That is one lender’s structure, not a network norm. Across the network Lendmire places files with, purchase leverage typically sits at 75% to 80% on standard files, and most files up to $3,000,000 follow the same tiers. Above $2,500,000, the network generally holds to 30-year fixed structures.
Why Does a DSCR Loan Need Equity at All?
Because the loan skips personal income documentation. Qualification runs primarily on property-level rental income covering the payment, subject to lender guidelines. The lender takes less comfort from your paystubs or traditional personal-income documentation, so it asks for more comfort from your equity.
That trade is the whole product. Self-employed investors, and investors with many financed properties, give up some leverage in exchange for no debt-to-income test and no property-count limit. Scotsman Guide describes this appeal for non-QM investor loans.
Equity also protects against a common misreading. Scotsman Guide calls out the belief that only the property gets qualified as a big misconception. Credit, reserves, and experience still count. A strong rent number does not erase a thin down payment or a weak score.
What Else Changes the Number?
Five things move your required equity up or down.
Credit score. A 620 floor exists in parts of the network. Most programs want around 660. The 700+ range unlocks the strongest leverage tiers, including the 85% purchase option. A lower score usually means a lower LTV ceiling, so a bigger down payment.
Rent coverage. A stronger DSCR opens better terms and sometimes more leverage. Many select programs start at a 1.00 DSCR, where the rent just covers the payment. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Expect more equity and more reserves on that path, not less.
Property type. A single-family rental, a condo, and a two-to-four-unit building can price differently. Manufactured homes (single- and double-wide), log homes, and barndominiums are not offered in the network’s DSCR programs, so no down payment amount fixes those.
Loan size. Standard programs run up to $3,000,000. Larger balances usually draw tighter terms and more reserves, and smaller balances route through select lenders rather than the standard programs.
Transaction type. A purchase gets the most leverage. A cash-out refinance gets less, and the “down payment” becomes the equity you leave in the property.
Why the Coverage Ratio Can Matter More Than the LTV Cap
The LTV cap sets the minimum cash you bring. The coverage ratio often decides how much you actually bring.
A larger down payment shrinks the loan, which shrinks the payment, which lifts the DSCR without changing the rent. That can move a borderline deal across a program’s coverage floor or into a stronger pricing tier.
Run the numbers on one modeled property whose rent stays the same across three leverage levels. These ratios are modeled assumptions, not market data:
- At 80% LTV, coverage sits just under 1.00x.
- At 75% LTV, coverage rises to roughly 1.05x.
- At 70% LTV, coverage rises to roughly 1.12x. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Same building, same rent, same tenant. The only change is how much cash went in at closing. At 80% the file falls below 1.00 and routes through the select-lender sub-1.00 path, with leverage and terms adjusted. At 75% it clears the 1.00 benchmark that many select programs use. This is why the stronger play can be putting down more than the minimum, even though it ties up more cash.
There is a real tradeoff here. Extra equity improves the ratio, but it also locks up capital you could use on the next deal. Run both versions before you commit. A thin ratio at 80% LTV is not automatically a reason to put down more. Sometimes a different property is the better fix. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
One caution. Clearing 1.00 does not mean positive cash flow. DSCR compares rent to PITIA only. Repairs, vacancy, management, utilities, and capital expenses sit outside the calculation, so budget for them separately.
What Is the Real Cash You Need at Closing?
The down payment is only the first piece. Budget three buckets:
1. Down payment: typically 20%–25% on a standard purchase.
2. Closing costs: appraisal, title, lender, and broker costs, paid on top of the down payment.
3. Reserves: commonly about 6 months of PITIA held after closing.
Reserves vary by lender, leverage, loan size, and transaction type. Conservative rate-and-term files at modest leverage under $1,500,000 can see reserves waived. Loans above that size typically step up to about 9 months. Treat 6 months as a planning number and confirm it on your file.
The appraisal also does double duty. It sets the value and includes a market rent schedule (Form 1007 for single-unit properties, Form 1025 for two-to-four units). Some programs review the file on the lesser of your lease rent and the appraiser’s rent figure, so a lease above market may not help.
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 Can the Down Payment Come From?
Your own savings are the cleanest source. Lenders ask for bank statements covering the down payment and reserves, the purchase contract, lease or rent data, and entity documents if you buy through an LLC, subject to program terms.
A cash-out refinance on a rental you already own is a common source for the next down payment. Scotsman Guide describes cash-out proceeds from one property funding a down payment on another. Plan the timing, because about 6 months of seasoning is the common expectation before you can refinance a property you just bought.
Whether borrowed funds count toward the down payment varies by program, so ask before you rely on them. Gifts and other unusual sources get a closer look as well. Know the answer before you sign a contract, not after.
Can You Get a DSCR Loan With No Money Down?
No. Zero-down is not a real DSCR purchase option. You may see marketing that implies it, but the equity requirement stays even when the money comes from somewhere other than your savings.
The closest thing to low-down is the 85% LTV tier, which means about 15% down with a strong score. Past that, you are looking at different products. For a fuller breakdown, see Lendmire’s explainer on DSCR loans with no down payment options. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Some borrowers also ask about no-ratio structures, which skip the rent test entirely. These are available only through select lenders, generally for borrowers who already own a primary residence. They are not a way around the equity requirement, and they come with their own terms.
Montana Specifics: Resort Markets, Rural Parcels, and Out-of-State Buyers
Montana is a recreation state, and many investors buy in Bozeman, Whitefish, and Big Sky with short-term rentals in mind. In those markets the rent-source question can matter as much as the percentage down.
The appraiser’s Form 1007 reflects 12-month market rent, which can come in well below what a vacation rental actually earns. Programs differ on which income source qualifies: appraisal rent, trailing statements, or projections. For short-term-rental files in the network, purchase leverage tops out at 75% LTV. Cash-out on short-term-rental collateral tops out around 70%. Expect a 640+ score and about 12 months of hosting history. On a purchase, the coverage floor is 1.00. On a refinance, the floor is also 1.00. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
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.
Out-of-state buyers face no separate Montana down payment tier. Your leverage depends on the same factors as anyone else’s: credit, rent coverage, property type, and reserves. Rural parcels and properties far from comparable sales can draw extra scrutiny at appraisal, so build in room for a lower valuation than you expect.
How Does This Compare to a Conventional Investment Loan?
Agency investor loans follow their own matrix, with leverage that differs between one-unit and two-to-four-unit properties. The Fannie Mae Eligibility Matrix also requires personal-income and debt-to-income qualification, which DSCR loans skip. Those agency rules do not govern DSCR files. DSCR leverage comes from the network ranges above.
| Factor | DSCR loan | Conventional investor loan |
|---|---|---|
| Income test | Property rent vs payment | Personal income and DTI |
| Typical equity | 20%–25% purchase | Set by agency matrix |
| Property-count limit | None in most programs | Often capped |
| Reserves | Commonly ~6 months | Varies |
For the full comparison, the complete DSCR loans guide walks through how the two products differ.
Common Mistakes on Down Payment Planning
- Budgeting only the down payment. Closing costs and reserves come on top.
- Assuming one percentage fits every lender. Programs differ, so compare more than one.
- Using a short-term-rental income number for the appraisal rent. The rent schedule may come in lower.
- Treating 1.00 as a guarantee. It is a starting point for select programs, not a promise.
- Ignoring loan-size floors on cheap properties. A very small balance may route through select lenders rather than standard programs.
- Forgetting seasoning on a refinance. Plan about 6 months before pulling equity from a fresh purchase.
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.
Frequently Asked Questions
What is the minimum down payment on a DSCR loan?
On a purchase, about 15% is the lowest tier, and it reaches only through select high-leverage programs with a score near 700 or higher. Most files require 20% to 25%. The exact figure depends on credit, rent coverage, property type, and loan size, subject to lender guidelines.
Does Montana have its own DSCR down payment rule?
No. The network carries no Montana-specific LTV overlay, so the standard purchase tiers apply. An individual lender may apply stricter treatment to a rural or resort-area property, so a quote on your specific property is the only reliable answer.
How much equity do I need for a DSCR cash-out refinance?
Plan to leave about 25% equity in a standard rental, since cash-out tops out around 75% LTV. On short-term-rental collateral the ceiling drops to around 70%, so you leave about 30%. A common expectation is about 6 months of seasoning before you refinance a property you just bought. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Do reserves count toward my down payment?
No. Reserves are cash you hold after closing, separate from the down payment and from closing costs. They commonly run about 6 months of PITIA, and about 9 months on loans above $1,500,000.
Can a bigger down payment fix a DSCR below 1.00?
Often, yes. A larger down payment shrinks the loan and the payment, which lifts the ratio. It does not erase credit floors, reserve rules, or property eligibility. Sub-1.00 coverage is also available through select lenders in the network, with leverage and terms adjusted. For a closer look at how equity works across programs, see DSCR loan down payment requirements.
Next Step
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. The calculator on this site gives an illustrative estimate you can edit, not a quote.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker that arranges DSCR investor loans through select lenders in its wholesale network, across 41 markets including Washington, D.C. It is not a lender, and nothing here is a commitment to lend. Programs change, and every file is underwritten individually. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your investment property. No commitment required.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. Scotsman Guide – Reach Real Estate Investors by Becoming an Expert in These Loans
2. Scotsman Guide – Invest in Your Future
3. Scotsman Guide – An Ace in the Hole
4. Fannie Mae Eligibility Matrix
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How Much Capital Each Additional DSCR Purchase Requires · How Much You Can Borrow for a No-Ratio DSCR Loan for LLC-Titled Borrowers? · No-Ratio DSCR Loan vs Delayed Financing: Which Fits?
Guides: DSCR Loans in Montana
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.