The Quick Read: It depends on the lowest of three limits: the leverage cap on the property’s value, the largest payment the rent can carry, and the program’s credit, reserve and loan-size rules. On the San Juan Islands in Washington, the rent side usually sets the number. “Rental” here covers both long-term leases and vacation rentals, and what counts as rent depends on the property’s rental permit status. Island prices run high against rents, so coverage tends to bind before leverage does. 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.
- Purchase leverage on an investment property typically runs 75%–80% LTV, and select high-leverage programs reach 85% with roughly a 700+ score.
- Cash-out on a standard rental tops out around 75% LTV across most of the network.
- Coverage is monthly rent divided by the full monthly obligation (principal, interest, taxes, insurance and dues). Select programs start at 1.00.
- Short-term rental (STR) income counts only with a documented hosting history, and the permit decides whether that history exists.
- Loan sizes run up to $3,000,000 on standard programs, subject to lender guidelines.
How Is the Maximum Loan Determined?
The loan amount is whichever of three limits is smallest. A file does not get the average of them. It gets the lowest one.
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Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Oct 29, 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 29, 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.
1. The value limit. Maximum LTV times the lesser of the appraised value or the purchase price.
2. The income limit. The biggest payment the rent can carry at the program’s coverage floor.
3. The program limit. Credit score tiers, reserves, property type and loan-size brackets.
Across the wholesale network, the value limit looks like this. These are typical ranges from select lenders, and every file is underwritten individually.
| Transaction | Typical maximum LTV |
|---|---|
| Investment purchase, long-term rent | 75%–80% |
| Investment purchase, select high-leverage | up to 85% (about 700+ score) |
| Cash-out refinance, standard rental | about 75% |
| STR purchase | up to 75% |
| STR cash-out refinance | about 70% |
A larger down payment lowers the monthly payment, which can lift the coverage ratio. It does not erase leverage caps, credit floors, reserve rules or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage. The complete DSCR loans guide covers the full qualification picture.
Key Terms Defined
DSCR (debt service coverage ratio): On a one-to-four unit rental, this is the property’s monthly rent divided by its full monthly housing obligation.
PITIA: Principal, interest, taxes, insurance and association dues, which together make up the obligation the rent has to cover.
LTV (loan-to-value): The loan balance as a percentage of the lesser of appraised value or purchase price.
STR income basis: The way a lender measures short-term rental income, usually from documented hosting history rather than a projection.
Rent schedule: The appraiser’s estimate of market rent from comparable rentals. It is Form 1007 on a single-family home and Form 1025 on two to four units.
How Do You Work Backward From the Rent?
Start with the rent, not the price. Divide the qualifying monthly rent by the coverage floor the program uses. The result is the largest monthly obligation the property can support. Taxes, insurance and dues come off that top, and what remains is the principal-and-interest room that sets the loan size.
At a 1.00 floor, rent must equal the full obligation. At 1.20, rent must exceed it by a fifth. Stronger ratios can still open better pricing and leverage, but only if the rent is there to meet them.
Now compare that income limit to the value limit. Picture an island house where 75% of the price would call for a payment well above what the rent supports at 1.00. The loan shrinks to the income limit, and the buyer’s down payment grows to fill the gap. That is why on the islands the effective leverage often lands below the program ceiling. The leverage cap never gets reached.
Clearing 1.00 also does not mean the property cash flows. Coverage compares rent to the housing payment only. Repairs, vacancy, management, utilities and capital costs sit outside the calculation.
Why Do the San Juan Islands Change the Math?
Three things push the numbers on island rentals. Prices are high against long-term rents. The payment carries heavy insurance, tax and dues loads. And the income you can count may hinge on a permit.
On insurance and taxes, the network sees island files where those lines take a large share of the monthly obligation. They go straight into the denominator. Get the insurance quote complete before the file goes in, because a stale or partial quote can shift the ratio late in review.
Loan size matters too. Island purchases can push balances into the higher brackets. Reserves are commonly around 6 months of PITIA, and loans above $1,500,000 typically step up to about 9 months. Above $2,500,000, the network generally holds to 30-year fixed structures.
Collateral is the other island issue. Ferry-access properties can have thin comparable sales and thin rental comps, and an appraiser has to find usable rentals to build the rent schedule. Thin comps can slow appraisal review or pull the rent figure down. Cabins are another trap: log homes, manufactured homes and barndominiums are not offered in these DSCR programs, however well they rent.
Does Rental Permit Status Change the Loan?
Yes, and it can change the loan more than any other single input. In San Juan County, the vacation rental framework has moved from a moratorium to a permanent structure, as the county’s moratorium page explains. San Juan Update reported a 337-permit cap on San Juan Island, with new permits going by lottery. Islands’ Sounder reported that Shaw Island prohibits vacation rentals. Current application status should be confirmed with the county before any file is built on STR income.
For the loan, the permit sorts a property into one of three income paths.
| Permit status | Income a lender can count | Likely effect on the loan |
|---|---|---|
| Permitted, with hosting history | Documented STR income | Largest income limit |
| Not permitted | Long-term market rent only | Smaller loan, lower leverage |
| Unclear | Treated as long-term rent until confirmed | Plan on the smaller number |
The STR path has its own program terms. Expect STR purchase leverage up to 75% and a 1.00 coverage floor. STR refinances and cash-out both sit around 70%, with a 1.00 floor on refinances, versus roughly 75% on a standard rental cash-out. A score of 640 or better and about 12 months of hosting history are typical expectations. Without that history, a new buyer is usually underwritten on long-term market rent. Seasonal bookings also matter, because uneven monthly income can be averaged or discounted, so month-by-month records help the file.
Permits are capped and scarce, so a permit can be part of a property’s value. Transfers may need a compliance check, so confirm the permit’s status before relying on it. Tax treatment varies; consult a qualified professional.
What Does the Appraisal’s Rent Figure Actually Measure?
For long-term rent, the appraiser’s rent schedule sets the income side. The appraiser documents estimated monthly market rent from comparable rentals on a form that Freddie Mac publishes alongside the appraisal forms. This is only a contrast point, since agency selling rules do not govern these loans. Still, the rent schedule was not designed for short-term rentals. It requires monthly-lease comparables and cannot estimate a nightly rate.
That is why STR files lean on hosting history or a market-data report instead. The appraisal still sets value and the long-term rent fallback. It does not stand in for booking income.
Purchase vs. Refinance vs. Cash-Out
Each transaction type changes what the lender is measuring.
| Transaction | What drives the loan |
|---|---|
| Purchase | Lesser of price or value, plus rent coverage |
| Refinance | Appraised value and coverage on the current payment |
| Cash-out | Value, about 6 months of seasoning, and coverage |
On a cash-out, seasoning is the quiet failure point. Lenders expect about 6 months of ownership on a recent purchase, documented by the settlement statement. Files that assume it away get kicked back. Cash-out proceeds are also sized by the 75% ceiling on standard rentals, not by the purchase tiers. The same logic applies if the property was bought as an STR and the investor refinances against its hosting history.
The related piece How Much a DSCR Lender Will Lend on a Vacation Rental in an LLC covers the entity side of those files.
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.
What If the Rent Doesn’t Cover the Payment?
There are several fixes, and they work in different ways.
1. Put more down. A bigger down payment lowers the loan and lifts coverage, though it does not change the leverage caps.
2. Pick a different structure. Interest-only periods and extended terms such as 40-year amortization are available through select lenders in the network. ARM structures exist for investors who want them. Ask how the lender measures coverage during the interest-only period, because the ratio can look different once principal payments begin.
3. Pursue a sub-1.00 path. Coverage below 1.00 is available through select lenders in the network, with leverage and terms adjusted. This is a separate path from the programs that start at 1.00.
4. Look at no-ratio programs. These are available only through select lenders, generally for borrowers who already own a primary residence.
5. Change the income strategy. If the permit allows it, documented STR income may support a larger loan than long-term rent.
Credit tiers shape how much room each path has. A 620 floor exists in parts of the network, most programs want around 660, and 700 or better unlocks the strongest leverage tiers.
Reserves, Entity and Documents
On island files, a clean document set helps avoid delays caused by missing or incomplete paperwork. Gather these before asking for a quote:
- Entity documents, if the property will be held in an LLC, subject to lender program eligibility.
- The lease for a long-term rental, or booking history by month for an STR.
- The county permit or compliance number for any STR.
- A complete insurance quote that includes the island-specific coverage.
- Reserves documentation, with account statements covering the months the program requires.
Reserves vary by lender, leverage, loan size and transaction type. They commonly run around 6 months of PITIA. Conservative rate-and-term files at modest leverage under $1,500,000 can see reserves waived.
Personal income documents generally are not part of the ratio. Credit, reserves and the appraisal are all still reviewed.
Frequently Asked Questions
Is there a legal maximum on a DSCR loan for an island rental?
No program sets a single fixed amount. Standard programs in the network go up to $3,000,000, and the actual limit is the lowest of the value, income and program limits. Above $2,500,000 the network generally holds to 30-year fixed structures.
Can projected Airbnb income count toward the loan?
Generally not. STR income usually needs about 12 months of hosting history, and the property must be permitted to operate as a short-term rental. A new buyer without history is typically underwritten on long-term market rent.
How much down payment does a San Juan Islands rental usually need?
Most purchase files land at 75%–80% LTV, which means 20%–25% down. Select high-leverage programs reach 85% LTV (15% down) with roughly a 700+ score. On island properties, the rent-supported limit may require more than the minimum.
What if the rent is below the payment?
A sub-1.00 path is available through select lenders in the network, with leverage and terms adjusted. A larger down payment, an interest-only structure, or a different income basis can also help. No-ratio programs are available only through select lenders, generally for borrowers who already own a primary residence.
Does my personal income matter?
The file qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Credit score and reserves still matter, and the appraisal and entity documents are all reviewed.
Next Steps
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. Lendmire is a broker that arranges these loans through select lenders in its wholesale network, across 41 markets including Washington, D.C. Reach the team at 828-256-2183 or request a quote through the quote form. The calculator on the site is an illustrative estimate, not a quote or a commitment to lend.
On the islands, the permit decides the income side, and the income side decides the loan.
For current guidelines and terms, see Lendmire’s DSCR loan programs page.
About Lendmire
Lendmire is a non-QM mortgage brokerage (NMLS# 2371349) arranging DSCR investor loans in 41 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR loans are evaluated by the lender on rental income rather than personal income, subject to lender guidelines — a fit for LLC-owned portfolios, self-employed investors, and operators scaling beyond conventional loan caps. Recognized as a Scotsman Guide Top Mortgage Workplace in 2025 and 2026.
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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. San Juan County, Vacation Rental Moratorium
2. San Juan Update: County Council Caps Vacation Rental Permits on San Juan Island
3. Islands’ Sounder: County Places Cap on Vacation Rentals
4. Freddie Mac
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 Equity a DSCR Lender Counts After a BRRRR Rehab · How Much a DSCR Lender Lends on a Rental Vested in an LLC · How Much a DSCR Lender Lends to an Existing Landlord
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.