The Quick Read: Usually at least 25% down on a purchase, because the no-ratio path through select lenders in Lendmire’s wholesale network tops out at 75% of the price on a short-term rental, and it is never a zero-down product. Qualification rests on credit and equity rather than a rent-coverage calculation, so your cash in the deal carries the weight.
- Short-term rental purchase: leverage up to 75%, which means about 25% down or more.
- Rate-term refinance on a short-term rental: up to 70%. Cash-out: up to 65%.
- Minimum credit score on this path: 640, with reduced leverage and stronger credit expected.
- Available only through select lenders, generally for borrowers who already own a primary residence.
- Closing costs, reserves, and furnishing are separate pots of cash from the down payment.
Key Terms Defined
Six terms come up repeatedly, so here they are once, in plain words.
- DSCR (debt service coverage ratio): monthly rent divided by the full monthly housing payment. A result of 1.00 means rent equals the payment.
- No-ratio: a loan path where no coverage ratio is computed. The lender looks at credit, equity, and the property instead.
- LTV (loan-to-value): the loan as a percentage of the property’s price or value. At 75% LTV, you put down 25%.
- PITIA: principal, interest, taxes, insurance, and any association dues. It is the full monthly obligation the ratio tests against.
- Reserves: liquid cash you hold after closing, usually counted in months of PITIA.
- Seasoning: the time you have owned a property or held funds before a lender counts them.
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.
What Does “No-Ratio” Actually Mean?
It means the lender does not run a rent-to-payment test on the property. Lenders say “no-ratio” loosely, so it helps to separate three paths. Each has its own envelope.
| Path | What gets tested | What it means for your cash |
|---|---|---|
| Standard DSCR | Rent vs. full payment | Leverage depends on coverage and credit |
| Sub-1.00 coverage | Rent below the payment | Select lenders; leverage and terms adjusted |
| No-ratio | Credit and equity | Select lenders; lower leverage, stronger credit |
On standard files, 1.00 is where many select programs start. It is a floor for specific programs, not a universal rule. A separate select-lender path takes coverage below 1.00 with leverage and terms adjusted. The no-ratio path goes one step further and skips the coverage calculation entirely.
That path is available only through select lenders, generally for borrowers who already own a primary residence. It does not extend to vacant properties, first-time homebuyers, or files with one credit score or none. 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.
Skipping the ratio does not skip underwriting. Credit, equity, property type, reserves, and the appraisal all still count.
How Much Do You Put Down on Each Transaction?
The down payment is the flip side of the leverage cap. The lender sets a maximum LTV, and you fund the rest. For a short-term rental on the no-ratio path, the envelope looks like this, subject to lender guidelines and credit approval.
| Transaction | Max LTV | Your equity or cash |
|---|---|---|
| Purchase | 75% | About 25% down or more |
| Rate-term refinance | 70% | About 30% equity retained |
| Cash-out refinance | 65% | About 35% equity retained |
On a refinance there is no cash down payment. Your existing equity does that job, which is why the ceilings step down as you pull more out. A cash-out on this path stops at 65% LTV on a short-term rental, a notch below the 70% ceiling on the ratio-tested path. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
The credit floor on this path is 640. A score at that floor is a minimum, not a target. Stronger credit generally earns more leverage, and Agora’s DSCR guide makes the same point about score and down payment.
Market surveys report that DSCR borrowers generally put down 20% or more, according to Point. Lendmire’s network is more specific for this product: 25% down or more on a no-ratio short-term rental purchase, since leverage tops out at 75%.
Why Does a No-Ratio Short-Term Rental Need Real Equity?
With no income test, equity becomes the lender’s main protection. The lender cannot lean on rent to show the property carries itself, so it wants a thicker cushion between the loan and the value. That is why this path sits at lower leverage than the strongest ratio-tested files.
Short-term rentals add a second reason. Their income is harder to pin down. A ratio-tested file usually needs a rent figure, and that figure is the hard part for a short-term rental.
- Appraisers typically start from a rent schedule built for long-term leases. McKissock, an appraisal-education provider, describes Form 1007 as a tool for estimating monthly market rent on one-unit investment properties, and notes the lender makes the final call on income.
- That form is only required when rental income is used to qualify a one-unit property, per a Fannie Mae note on short-term rentals and Form 1007. It is the agency’s form, cited here only for what it measures. It does not set the terms of a DSCR loan.
- Lenders vary on how much of projected nightly income they credit, so a short-term rental that looks strong on a booking platform can still come up thin on paper.
A no-ratio structure sidesteps that measurement problem. You trade it for a bigger equity stake and a credit-driven review. Across the network, that trade is the whole point of the product.
What Do Ratio-Tested Short-Term Rental Files Look Like?
If the property can clear a coverage test, the standard path usually offers more leverage. Short-term rental purchases reach 75% LTV there, and refinances run around 70%. Cash-out on short-term rental collateral tops out at 70%, compared with 75% for standard long-term rentals.
Expect a 640 or better credit score and about 12 months of hosting history. The coverage floor is 1.00 on purchases and refinances. Those are select-program floors, not promises. Stronger ratios open better pricing and leverage.
So the real question is whether the property has the income to pass. If it does, the ratio-tested path may stretch your cash further. If it does not, because it is new, seasonal, or still ramping up, the no-ratio path may be worth the extra equity.
Does a Bigger Down Payment Help?
Yes, in two ways, but it never overrides the rules. On a ratio-tested file, a larger down payment shrinks the loan and the monthly payment. A smaller payment lifts the coverage number without any change in rent. A thin 0.95 can start to look better at lower leverage.
A bigger down payment never erases the leverage cap for your property type and transaction, the credit floor, reserve requirements, or property eligibility. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
The strongest files clear both tests: enough equity and enough rental coverage. On the no-ratio path, only the equity half applies, which is why more cash down tends to support the file.
What Cash Do You Need Beyond the Down Payment?
Plan for more than the down payment. This is the part of the budget investors often underestimate on short-term rentals.
- Closing costs. They are separate from the down payment and need their own cash.
- Reserves. These vary by lender, leverage, loan size, and transaction type. Around 6 months of PITIA is common. Conservative rate-term files at modest leverage under $1,500,000 can see reserves waived. Loans above that size typically step up to about 9 months.
- Furnishing and setup. A rental that guests book needs furniture, linens, and supplies. Lenders do not finance these inside the loan, so budget them from your own cash.
- Renovation. Work you plan after closing is also your own capital.
- Prepayment terms. Many investor loans carry a prepayment penalty, so confirm the structure before you sign.
Down payment funds need a clear paper trail. Lenders want to see where the money came from and that it has sat in your account, not been borrowed on a card or moved in last minute. Programs differ on whether borrowed funds can be used. Check before you draw.
Is a No-Ratio Loan the Right Fit?
It fits when the property cannot show normal rental income yet, and you have the equity and the credit to carry it. Think of a short-term rental that has just launched and has no booking history. Or a seasonal property whose coverage looks thin when averaged over the year. A strong borrower with cash can choose this path rather than force a bad ratio onto a good property.
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.
It is a poor fit when the property already clears the coverage test. In that case the ratio-tested path may give you more leverage. It is also a poor fit if your cash is tight. The no-ratio ceilings are lower, so you need more of it.
One caution matters here. Clearing 1.00 is not the same as positive cash flow. DSCR compares rent to PITIA only. Repairs, vacancy, management, utilities, and capital expenses sit outside the calculation, and short-term rentals have more of each. On a no-ratio loan, nobody is checking whether the property pays for itself. That job falls to you.
The structure is flexible. The spine is the 30-year fixed, with extended terms and interest-only periods available through select lenders in the network, and ARM structures for investors who want them. Standard programs run up to $3,000,000, though smaller balances route through select lenders.
There is also an upside to the investor-loan structure. As Point notes, DSCR financing does not count against your personal debt-to-income ratio, and there is no cap on the number of properties you can finance. That is useful if you plan to scale.
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. 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.
For related reading, Lendmire’s guide How to Qualify for a No-Ratio DSCR Loan on Short-Term Rental Properties covers the borrower side. For the full picture, start with the complete DSCR loans guide.
Frequently Asked Questions
Can I buy a short-term rental with no money down on a no-ratio DSCR loan?
No. A no-ratio loan skips the coverage test, not the equity requirement. On a short-term rental purchase, leverage tops out at 75%, so you should plan on at least 25% down. Borrower equity is the collateral that makes the no-ratio structure workable. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Is a no-ratio loan harder to get than a standard DSCR loan?
It is narrower. It is available only through select lenders, generally for borrowers who already own a primary residence. Vacant properties, first-time homebuyers, and files with one or no credit score are out. Within that lane, the minimum credit score is 640 and leverage runs lower than on the strongest ratio-tested files.
Does a no-ratio loan need less documentation?
Qualification runs on credit and equity rather than a rent-coverage calculation, subject to lender guidelines. You still provide credit authorization, proof of funds for the down payment and reserves, and entity paperwork if you buy in an LLC, subject to lender program eligibility. The property still gets appraised.
What if I am refinancing a short-term rental instead of buying?
Your equity replaces the down payment. A rate-term refinance on this path goes up to 70% LTV and a cash-out up to 65%, so you keep roughly 30% to 35% equity in the property. Pulling cash out costs you leverage. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Can an LLC borrow on this path?
Often yes, subject to program terms. Investors commonly buy rentals through an LLC, and the lender will review the entity documents along with your personal credit.
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. The brokerage arranges DSCR financing through select lenders in its wholesale network across 41 markets, including Washington, D.C. Programs change, and every file is underwritten individually, so this is not a commitment to lend.
About Lendmire
Lendmire (NMLS# 2371349), a non-QM mortgage broker serving investors in 41 markets including Washington, D.C., helps structure DSCR scenarios commonly evaluated around a property’s rental income rather than personal income paperwork, subject to lender guidelines. A Scotsman Guide Top Mortgage Workplace in 2025 and 2026, Lendmire places loans through wholesale investor lenders and is not a direct lender.
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References
2. Point: DSCR Loans Pros and Cons
3. McKissock: Form 1007 and Its Impact on Short-Term Rental Appraisals
4. red.nv.gov: Fannie Mae Short Term Rentals
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 a Luxury Rental DSCR Loan Works in Illinois · How Much Down Payment Does a Luxury Investment Property DSCR Loan Need? · How Much Can You Borrow With a Jumbo DSCR Loan?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.