The Quick Read: On Nantucket, the loan amount is the smaller of two limits: what the leverage cap allows against the price, and what the property’s rent can carry. At island prices, the rent limit usually binds first, so the loan often lands well below the leverage cap.
- Purchase leverage typically runs 75%–80% LTV (loan-to-value, the loan as a share of price) on most files.
- Cash-out refinances top out around 75% LTV on standard rentals.
- Rent is measured against PITIA (principal, interest, taxes, insurance, association dues), and 1.00 is where select programs start.
- Standard programs go up to $3,000,000, with reserves stepping up to about 9 months above $1,500,000.
- Clearing the coverage test is not the same as positive cash flow.
Nantucket is a stress test for DSCR math. Prices sit far above what year-round rents support. The two limits below explain why, and what you can do about it. Everything here is subject to lender guidelines and is not a commitment to lend.
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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.
Key Terms Defined
DSCR (debt service coverage ratio): The property’s qualifying monthly rent divided by its monthly PITIA. A result of 1.00 means rent equals the payment.
PITIA: Principal, interest, property taxes, insurance, and association dues. It is the full monthly housing obligation.
LTV: The loan amount divided by the property’s value or purchase price, whichever is lower.
Reserves: Liquid savings, measured in months of PITIA, that you hold after closing.
Rent used for lender review: The rent figure the lender uses, typically the lower of the lease or the appraiser’s market rent on a long-term rental.
What Are the Two Ceilings on a Nantucket Loan?
Every DSCR loan is sized by two independent tests, and the smaller answer wins. The value test multiplies the leverage cap by the purchase price or appraised value, whichever is lower. The payment test asks what the largest payment is that the rent can support at the program’s coverage floor.
Here is how the payment test works. Take rent used for lender review and divide by the coverage floor. That gives the maximum PITIA. Subtract taxes, insurance, and association dues. What remains is room for principal and interest, and that room converts into a loan amount.
On most mainland rentals the two tests land close together. On Nantucket they do not. The island’s Mass.gov housing snapshot reports a median home price of $3.5 million and an average of $4.8 million. A Census-based cost-of-living site, costoflivingdata.com, shows median gross rent for year-round tenants that is modest relative to those prices. Rent that modest against a price that high leaves a wide gap, so the payment test cuts the loan well below the leverage cap.
Other sources put the price level even higher. A local brokerage market report from Kalman & Co. shows a median sold price of $3,675,000 for the first half of the year. Methods differ, so treat these as a range, not one number.
How Does the Math Run on a Nantucket Purchase?
Run it with ratios, not dollars. Say you are buying a home at a price in the multi-million range, using 75% LTV, which sits inside the typical 75%–80% purchase range. The value test says you may borrow three-quarters of the price. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Now apply the payment test. With year-round rent near the Census median, coverage on that loan would land far below 1.00. That is not close. The payment is a multiple of what the rent supports, once you add island taxes, insurance, and any association dues.
So the file does not clear on long-term rent at that leverage. Coverage below 1.00 is available through select lenders in the network, with leverage and terms adjusted. Even there, expect a lower loan, not a rescue.
The honest picture looks like this:
| Lever | Effect on loan size |
|---|---|
| Higher purchase price | Raises PITIA faster than rent |
| Larger down payment | Lowers PITIA, lifts coverage |
| Higher rent used for lender review | Raises the payment-side ceiling |
| Higher appraisal | No effect on the payment-side ceiling |
A bigger down payment is the main lever you control. It lowers the payment and can lift the DSCR. It never erases leverage caps, credit floors, reserve rules, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.
How Does Underwriting Treat Rent on the Island?
For a long-term rental, the lender uses the lower of the signed lease or the appraiser’s market rent. A lease above market adds nothing. The appraiser documents market rent on Form 1007 for a single-family home or Form 1025 for a 2–4 unit property. Those are agency form names used only as appraisal templates. DSCR loans are not agency products.
Short-term rentals (stays of 31 days or less) are a different case from long-term rentals, so they matter here. Across our wholesale network, short-term rental files typically carry tighter terms: purchase leverage to 75% LTV, refinance around 70%, and cash-out 70%. Expect a score of 640 or better and about 12 months of hosting history. The coverage floor is 1.00 on purchases and refinances.
Form 1007 is a long-term rent form, so short-term income needs separate support. Lenders generally look at platform history or a market-data projection. Residential investor DSCR programs generally divide the gross rent used for program review by PITIA, so don’t mix that formula with other income measures.
Seasonality is the trap. A page from The Offer Sheet puts peak-season weekly rates at $15,000 to $50,000-plus in July and August. That is color, not an underwriting number. A strong annual figure can hide thin shoulder months, and the ratio uses a monthly average.
Can Short-Term Rental Income Count on Nantucket?
It can count when it is legally permitted, and permit status can change eligibility. The Town of Nantucket states that any owner renting for 31 consecutive days or less must apply for a Short-Term Rental Certificate. Each dwelling unit offered for rent needs its own certificate of registration. Rentals of 14 days or less in a calendar year are not treated as short-term rentals.
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. Confirm the certificate and the unit registration before you count a dollar of vacation income. Lenders reviewing short-term files commonly want income that is legal to collect.
Our piece How Much a Short-Term Rental DSCR Loan Lends on a Paid-Off Property covers that structure in depth.
What Costs Move the Ratio on an Island Home?
Anything that raises PITIA drags coverage down. On Nantucket, the heavy items are taxes, insurance, and association dues. Wind and flood coverage can be a large share of the payment on a coastal property, so get a real insurance quote before you size the deal.
Budget for these items, which vary by property and location. The practical point is simple. A higher insurance quote lowers the maximum loan on the payment test even if the price and rent never change.
How Can You Raise the Loan Amount?
Four moves work. Others do not.
1. Put more down. This is the cleanest fix. Less loan means less PITIA, so coverage rises.
2. Choose a longer or interest-only structure. The spine of most programs is the 30-year fixed. Extended terms such as 40 years and interest-only periods are available through select lenders in the network. ARM structures exist too. These can lower the qualifying payment, with different terms.
3. Raise supportable rent. A documented, legal short-term income stream can outrun long-term rent, if the file supports it.
4. Use sub-1.00 coverage paths. They are available through select lenders in the network, with leverage and terms adjusted.
A higher appraisal does not help. If the appraisal comes in low, the loan can shrink. If it comes in high, the loan does not grow beyond the payment-side ceiling. Island comparables can be thin, which makes appraisal risk worth planning for.
One broker observation: on high-price vacation files, the strongest packages pair a large down payment with documented income from a legal rental structure. The ones that stall rely on a headline summer number with no history behind it.
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 About Refinance and Cash-Out?
The same two tests apply. A cash-out refinance on a standard rental tops out around 75% LTV, and about 6 months of seasoning is the common expectation. On a short-term rental, cash-out is limited to 70%. Rent still has to carry the new, larger payment. On a high-value island property, that is often the binding constraint again.
What Else Does Underwriting Review?
Credit counts. A 620 floor exists in parts of the network, most programs want around 660, and 700 or higher unlocks the strongest leverage tiers. A few high-leverage purchase programs reach 85% LTV with roughly a 700-plus score, though a Nantucket price tag makes that unlikely to pencil.
Reserves vary by lender, leverage, loan size, and transaction type. They are commonly around 6 months of PITIA. Loans above $1,500,000 typically step up to about 9 months. On a multimillion-dollar loan, plan on the higher number.
Loan size is not the obstacle. Standard programs run up to $3,000,000, and above $2,500,000 the network generally holds to 30-year fixed structures. Manufactured homes, log homes, and barndominiums are not offered.
Do Conforming Loan Limits Cap a DSCR Loan?
No. Agency limits do not govern DSCR loans. The 2026 baseline is $832,750, with a high-cost ceiling of $1,249,125, per Orrick’s summary of the FHFA announcement. Those figures matter only as a contrast. Your DSCR loan is sized by program limits, leverage, and coverage, not by agency caps.
For the full picture of how these loans work, read the complete DSCR loans guide.
If the Numbers Don’t Clear
Work this list in order.
- Raise the down payment and re-run coverage.
- Get a firm insurance quote and re-check PITIA.
- Confirm the rental certificate and which income basis the file will use.
- Ask about sub-1.00 coverage paths through select lenders, knowing terms adjust.
- Consider a smaller or lower-priced property whose rent fits the payment.
Passing the DSCR test is not the same as a profitable deal. Gross rent ignores vacancy, management, utilities, repairs, and capital costs. Run your own cash-flow model alongside the lender’s math.
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.
Frequently Asked Questions
How much can I borrow with a DSCR loan on Nantucket?
Borrowing power is the lower of the leverage-cap loan and the loan the rent can support. Standard programs go to $3,000,000, with purchases typically at 75%–80% LTV. Nantucket rents rarely carry that much debt, so the rent-based limit usually decides, subject to lender guidelines.
Do I need to put more than 20% down?
Often, yes. The leverage minimum is only a floor on equity. If rent cannot cover the payment on the remaining loan, a larger down payment lowers PITIA until coverage works, or until a select lender’s sub-1.00 path fits.
Can I just use my own rental projection to qualify?
No. The underwriter chooses an income basis, and programs can discount short-term income or fall back to long-term rent. A projection helps only when it is supported and the rental is legally permitted.
Is a Nantucket property too expensive for a DSCR loan?
Not by size alone. Standard programs run up to $3,000,000, and agency limits do not cap DSCR loans. Price matters because it drives the payment. Larger balances also bring higher reserves, typically about 9 months of PITIA above $1,500,000.
Does passing the DSCR test mean the property cash flows?
No. The ratio compares rent to PITIA only. Vacancy, management, repairs, utilities, and capital costs sit outside it, so a property can clear 1.00 and still lose money.
About Lendmire
Lendmire, NMLS# 2371349, is a non-QM mortgage broker serving real estate investors in 41 markets, including Washington, D.C., through DSCR investor loan programs. Qualification is generally reviewed around the subject property’s rental income, not the borrower’s W-2 history — a practical fit for LLC-titled portfolios and self-employed investors. All scenarios remain subject to lender review and program guidelines. Two consecutive Scotsman Guide Top Mortgage Workplace recognitions (2025, 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. Mass.gov Nantucket Housing Snapshot
2. costoflivingdata.com, Nantucket
3. Kalman & Co.
6. Orrick, FHFA 2026 conforming loan limits
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 a DSCR Loan Lends on a Business Acquisition · How Much a Blanket DSCR Loan Lends on Rentals With Underpriced Leases · How Much a DSCR Lender Lends on an Inherited Rental
Guides: DSCR Loans in Nantucket, MA · DSCR Loans in Massachusetts
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.