Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
The Quick Read: Usually no. On short-term rental collateral, most programs in Lendmire’s wholesale network cap a purchase at 75% loan-to-value, so the planning number is about 25% down, and the lower-down options that do exist sit mostly on long-term rentals with strong credit, coverage, and reserves. Treat anything below 20% on an Airbnb as the exception, not the plan.
- Purchase ceiling: up to 75% LTV on the strongest short-term rental files, subject to lender guidelines.
- Refinance and cash-out: around 70% LTV on short-term rental collateral.
- Credit and experience: a 640 minimum score and about 12 months of hosting or landlord history.
- Coverage: 1.00 on a purchase, with stronger ratios opening better pricing and leverage.
Short-Term Rental Calculator
Run the STR numbers in your market
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 nightly rate, occupancy, taxes, and insurance for a more accurate picture.
Short-term rental income is documented with a 12-month history or a market data report. Program parameters update from Lendmire’s centralized guideline source.
As of Oct 15, 2026 · General Freddie Mac market benchmark, not a Lendmire loan offer. Nightly rate, occupancy, taxes, and insurance are editable estimates. 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.
Here is the part that surprises people. A DSCR loan skips the personal-income paperwork. It does not skip the equity requirement. Those are two separate tests, and your file has to pass both.
Why 25% Down Is the Planning Number for an Airbnb
The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
A short-term rental purchase generally tops out at 75% LTV across the programs Lendmire places files with. That works out to roughly 25% down before closing costs and reserves. Lenders treat Airbnb income as less predictable than a 12-month lease, so they hold back more equity.
LTV means loan-to-value: the loan amount divided by the property’s value. The Consumer Financial Protection Bureau explains that a higher down payment means a lower LTV. A 75% LTV loan means you bring 25%. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Lenders see many more long-term rental files than short-term ones. Nightly income swings by season, by platform ranking, and by how well the host runs the place. A lease does not swing. So the same lender that will stretch leverage on a duplex with a signed tenant often pulls back on a lake cabin that books well in July.
Three things set the terms on a DSCR loan, and the lender checks each one on its own:
- the leverage cap for the property and transaction type
- the credit score tier
- the coverage ratio the property produces
Meet all three and you get the best terms available. Miss one and the others do not make up for it.
How the Down Payment Moves Your Coverage Ratio
A bigger down payment shrinks the loan, which shrinks the monthly obligation, which lifts your coverage number. That is the one real lever the down payment pulls on DSCR.
DSCR stands for debt service coverage ratio. In the residential investor world, the lender compares the property’s qualifying income to PITIA: principal, interest, taxes, insurance, and any HOA dues, all on a monthly basis. The general idea of income divided by debt service is the same one Corporate Finance Institute describes for commercial lending. Residential DSCR programs usually simplify it to rent over PITIA.
A ratio of 1.00 means income exactly covers the payment. At 1.25, income covers it with a 25% cushion. Many select programs start at 1.00, and stronger ratios tend to unlock better pricing and higher leverage. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted.
Run the numbers on one modeled property. These ratios are illustrative assumptions, not market data. A smaller down payment means a bigger loan, so coverage falls as leverage rises:
| Down payment | LTV | Modeled coverage | Read |
|---|---|---|---|
| 20% | 80% | Roughly 1.02x | Above the 75% short-term rental purchase ceiling |
| 25% | 75% | Roughly 1.10x | Clears 1.00 with thin cushion |
| 30% | 70% | Roughly 1.16x | More cushion, better file |
Notice the gains are modest. Taxes, insurance, and HOA dues do not shrink when the loan does, so five extra points down moves the ratio less than you might expect. Putting more down helps. It rarely rescues a weak property.
The same logic runs the other way. Going lower than 25% pushes the ratio toward 1.00 and below, which is where leverage caps and pricing adjustments pile up.
Does DSCR Remove the Down Payment?
No. DSCR is a way of qualifying the loan, not a way of funding the purchase. It changes what the lender looks at to judge repayment, which is the property’s income rather than your traditional personal-income documentation. The equity requirement stays.
Think of two gates. Gate one asks whether the rent or Airbnb income covers the payment. Gate two asks whether you have enough skin in the game for this property type, credit score, and loan size. A file that clears gate one with room to spare still hits the leverage cap at gate two.
This is where the phrase “no money down DSCR” misleads people. The loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Nothing in that structure hands you the down payment.
DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. You also cannot live in the Airbnb and call it a DSCR deal.
Where Less Than 20% Down Does Show Up
Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Lower down payments appear mainly on long-term rentals with strong files. Select high-leverage programs on standard rentals reach 85% LTV on a purchase, roughly 15% down, for borrowers with scores around 700 and up, solid coverage, a simple property type, and healthy reserves. Those programs usually cost more through pricing adjustments or higher reserve requirements.
Short-term rental collateral does not get that treatment. The ceiling stays at 75% LTV on a purchase. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Cash-out and refinance sit lower still. Cash-out on short-term rental collateral tops out around 70% LTV, while most standard rentals in the network go up to 75%. Same investor, same credit, different property use, different cap. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Coverage below 1.00 is a real path through select lenders in the network, with LTV and terms adjusted. It trades equity for flexibility, not the reverse. If your Airbnb pencils below 1.00 on the lender’s income figure, expect to bring more cash, not less.
So what is the honest play for an investor who wants under 20% down? Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
1. Buy a long-term rental first, if the strategy allows, and use the stronger leverage tier there.
2. Buy the Airbnb at 75% LTV and accept that 25% is the real number.
3. Use equity from another property to fund the down payment. Lendmire’s piece How to Stack a Cash-Out and DSCR Loan to Buy an Airbnb With Less Down walks through that sequence. Every figure here varies by lender and program: guidelines, property type, leverage, and credit profile all apply.
How Airbnb Income Gets Counted
Lenders do not take your projected nightly rate at face value. For an operating Airbnb, they usually want about 12 months of actual history: platform statements, a property manager’s reports, or bank deposits. For a purchase with no history, a market analysis or appraiser’s rent survey may stand in, depending on the program.
The appraisal matters more than most buyers expect. DSCR files typically need an appraisal that includes a rent schedule. Fannie Mae’s appraiser guidance describes the Form 1007 rent schedule, used for single-family and condo investment properties, and ties it to short-term rentals. Two- to four-unit properties use a different schedule, Form 1025.
Here is the catch. That rent schedule often reflects long-term market rent, which can sit well below what a good Airbnb earns. If the program defaults to that figure, a deal that works on Airbnb income can fail on paper. Ask the lender which income figure the program uses before you write the offer.
Also expect a haircut. Some programs discount short-term income or require minimum report standards. Underwrite to the lender’s number, not the host-tool estimate.
What a Stronger Low-Equity File Looks Like
Compensating factors are the things that make a lender comfortable at the edge of its leverage range. They do not erase caps, but they decide whether you land at the top of the range or a few points below.
- Credit. A 640 score is the minimum on short-term rental files. Higher tiers, typically 700 and up, open stronger leverage.
- Coverage. A ratio comfortably above 1.00 beats one that just clears it.
- Experience. About 12 months of hosting or landlord history is the usual expectation.
- Reserves. These are liquid funds left after closing. They commonly run around six months of PITIA, though they vary by lender, leverage, loan size, and transaction type.
- Property type. Single-family homes and condos are simpler than 2-4 units. Manufactured homes, log homes, and barndominiums are not offered in these DSCR programs at all.
Loan size matters too. Standard programs run up to $3,000,000, and smaller balances route through select lenders in the network. Above $2,500,000 the network generally holds to 30-year fixed structures.
Where the Down Payment Can Come From
The down payment needs to come from documented funds. Savings, sale proceeds from another property, and cash pulled from an existing rental are all common sources. Gift rules and seasoning requirements vary by program, and reserves in particular often cannot come from gifts.
Many first-time Airbnb buyers ask about seller financing to bridge the gap. It can work in some structures, though the lender reviews the combined debt on the property. Lendmire’s comparison of a 15% down DSCR vs seller second for a first Airbnb buy covers that tradeoff in detail.
One more thing. LLC vesting is common for investor purchases, subject to lender program eligibility. Set up the entity before you apply, not after.
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.
Cash to Close Is the Real Hurdle
Down payment, closing costs, and reserves all come out of the same pool of cash. Buyers who plan for the down payment alone get squeezed at the end.
Build the list in this order:
1. Down payment at the program’s LTV cap, or lower if coverage is thin.
2. Closing costs and prepaid items.
3. Post-closing reserves.
4. Furnishing and startup costs, which sit outside the loan entirely.
That last item catches Airbnb buyers specifically. A long-term rental can be rent-ready with appliances. A short-term rental needs furniture, linens, and décor before the first booking. None of that counts toward qualifying.
A smaller down payment can also be offset by higher pricing. Compare the full terms, not the headline leverage.
Stress-Test Before You Commit
Clearing 1.00 does not mean the property makes money. DSCR compares income to PITIA only. Repairs, vacancy, management, utilities, cleaning, and capital expenses all sit outside the calculation. A file can pass underwriting and still lose cash every month.
Run three checks before you offer:
- Slow season. What does coverage look like in your three weakest months, not your average?
- Haircut. If the lender discounts your income estimate, does the ratio still hold?
- Higher cost. What happens if insurance or taxes jump at the next renewal?
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. A great ratio on an Airbnb you cannot legally operate is a very expensive hobby.
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.
A Quick Decision Guide
Match your situation to a path:
- You have 25% or more in documented cash, a 640+ score, and hosting history. Pursue the Airbnb purchase at up to 75% LTV.
- You have 25% but no hosting history. Ask which programs accept a market analysis on a purchase, and expect that to be reviewed more closely.
- You have less than 20% and a strong score. Look at a long-term rental on a higher-leverage program first, then add the Airbnb later with equity from that property.
- You have thin cash and thin coverage. Wait, save, or pick a property whose income clears 1.00 with room to spare. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
The wry truth: the loan almost never fails because of the loan. It fails because the buyer budgeted for the down payment and forgot everything around it.
For the full program picture, Lendmire’s complete DSCR loans guide covers how the loan works across property types.
Key Terms Defined
DSCR (debt service coverage ratio): the property’s qualifying income divided by its monthly debt obligation. A result of 1.00 means income exactly covers the payment.
LTV (loan-to-value): the loan amount divided by the property’s value. The down payment is the remainder.
PITIA: principal, interest, taxes, insurance, and any HOA dues, the full monthly cost the lender compares income against.
Reserves: liquid cash you hold after closing, usually expressed in months of PITIA.
Form 1007: the appraiser’s rent schedule for single-family and condo properties, used to estimate market rent.
Seasoning: a waiting period a lender requires, such as how long you have owned a property before a cash-out refinance.
Frequently Asked Questions
Can I buy an Airbnb with 10% down on a DSCR loan?
Not on short-term rental collateral. The ceiling on a purchase is 75% LTV, which means roughly 25% down on the strongest files. Higher-leverage programs exist mainly for long-term rentals with strong credit and coverage, and they cost more in pricing and reserves. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Does a DSCR loan need traditional personal-income documentation for an Airbnb?
DSCR qualifies primarily on property-level income covering the payment, subject to lender guidelines. You still document the property’s income, credit, reserves, and entity. Personal-income documentation is not the main test.
What credit score do I need for a short-term rental DSCR loan?
Expect a 640 minimum on short-term rental files. Most standard programs look for around 660, and scores of 700 and up unlock the strongest leverage tiers. Exact eligibility depends on the lender, the property, and the loan scenario.
Can I buy an Airbnb with no hosting history?
Often yes on a purchase, because some programs accept a market analysis in place of 12 months of history. Programs generally prefer actual history, and refinances usually require it. Expect a closer look at the income estimate.
Will putting more down get me a better DSCR?
It helps, but modestly. A larger down payment shrinks the loan and lifts the ratio, yet taxes, insurance, and dues stay fixed. It does not override leverage caps, credit floors, reserve rules, or property eligibility.
Your 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. As a mortgage broker arranging DSCR loans through select lenders in 41 markets, including Washington, D.C., the team can be reached at 828-256-2183. Programs change, every file is underwritten individually, and nothing here is a commitment to lend.
The investors who get the Airbnb they want usually do the same thing: they size the deal to 25% down, then build the cash cushion around it.
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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References
1. CFPB: What Is a Loan to Value Ratio and How Does It Relate to My Costs
2. Corporate Finance Institute: Debt Service Coverage Ratio
3. Fannie Mae: Appraiser Update
This article is part of Lendmire’s short-term rental loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How Big Can a Large-Balance DSCR Loan Be? · How to Qualify for a 40-Year Super Jumbo DSCR Loan · How Luxury Airbnb DSCR Loan Sizes Work From Jumbo to Super Jumbo
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- 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.