The Quick Read: Usually 20% to 25% down on a purchase, because most programs in Lendmire’s wholesale network cap investment-property purchases at 75% to 80% of the property’s value, and choosing interest-only does not change that cap. Select high-leverage programs reach 85% loan-to-value (15% down), generally for borrowers with scores around 700 or higher.
- Interest-only changes the payment the lender tests, not the equity rule.
- Most purchase files land at 75%–80% LTV, which means 20%–25% down.
- Credit tiers run from a 620 floor in parts of the network, to about 660 for most programs, to 700+ for the strongest leverage.
- Budget for reserves of about 6 months of PITIA, and more on loans above $1,500,000.
- Clearing 1.00 coverage is not the same as positive cash flow.
Everything below is subject to lender guidelines, and none of it is a commitment to lend. Programs change, and every file is underwritten individually.
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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.
What Sets the Down Payment?
Your down payment is the purchase price minus what the lender allows you to borrow, and the lender’s loan-to-value limit does the allowing. Loan-to-value (LTV) is the loan amount divided by the property’s value. At 75% LTV you put 25% down. At 80% LTV you put 20% down. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Across the network, purchase leverage most often lands between 75% and 80% on investment properties. A select group of high-leverage programs goes to 85% LTV, which is 15% down, and those usually want a score of about 700 or better. The network figures above are the ones that apply to files Lendmire arranges.
Five things move your number within that range:
- Credit score. A 620 floor exists in parts of the network. Most programs want around 660. The strongest leverage tiers want 700+.
- Coverage ratio. Stronger rent-to-payment coverage opens better leverage. A thinner ratio can mean more cash down.
- Property type. Single-family rentals and small multifamily are standard. Short-term rentals have their own caps, covered below.
- Loan size. Standard programs run up to $3,000,000. Above $2,500,000 the network generally holds to 30-year fixed structures.
- Your status as a first-timer. Covered in its own section.
Does Interest-Only Change the Down Payment?
No. Interest-only is a feature of the loan’s payment structure, so it changes what the lender tests for coverage, not the equity you owe at closing. A broker who sees many lenders’ guidelines can say this plainly: leverage comes from the program matrix, and the matrix is driven by credit, coverage, property type, and loan size.
An interest-only period means your payments cover interest only for a set window. The balance does not fall from scheduled payments. After the window, the loan amortizes over the years that remain. Extended terms and interest-only periods are available through select lenders in the network, so not every program offers them.
Here is where interest-only does matter. DSCR is monthly rent divided by the monthly housing obligation: principal, interest, taxes, insurance, and any HOA dues, together called PITIA. On an interest-only execution, the principal drops out of that test, so the same rent produces a higher ratio. Some programs qualify the file on the interest-only payment. Others test it at the fully amortizing payment. Ask which test applies before you pick a property.
Many investors expect interest-only to mean a smaller down payment. It doesn’t. In practice, files using it can face tighter credit or leverage conditions at the lender’s discretion, so don’t plan around a discount.
| Factor | Interest-only | Fully amortizing |
|---|---|---|
| Payment in the coverage math | Interest, taxes, insurance, dues (where the program tests the I-O payment) | Principal, interest, taxes, insurance, dues |
| Coverage ratio, same rent | Higher | Lower |
| Down payment rule | Set by program LTV | Set by program LTV |
| Principal paydown early | None | Builds each month |
| Payment later | Steps up after the window | Stays level |
Do First-Time Investors Need More Down?
Often a first-timer lands at the 20% to 25% end of the range rather than the 15% end. Lenders want proof you can carry a rental, and a first-time investor has no landlord track record to show them. Some programs weigh that with a little more equity. Others treat you like anyone else.
Being new does not guarantee any particular LTV, and it doesn’t shut you out either. What helps most is a stronger score, a clean credit history, documented reserves, and a property whose rent clearly covers the payment. A first-timer with a 700+ score and good coverage can sit in a better tier than an experienced investor with a 640.
Lendmire’s piece How Much Down Payment Does an Interest-Only DSCR Loan for Out-of-State Investors Need? shows a different borrower profile, and the complete DSCR loans guide covers the full product.
Down Payment Math: Three Profiles
The formula is simple: price times (1 minus LTV) equals your down payment. Rather than multiply it out, use the percentages below and let a calculator convert them for your price. The calculator on this page is an illustrative estimate only.
| Profile | Typical LTV | Down payment |
|---|---|---|
| Standard purchase | 75%–80% | 20%–25% |
| High-leverage select program | Up to 85% | 15% |
| Short-term rental purchase | Up to 75% | 25% or more |
Short-term rentals sit in their own lane. Purchase leverage tops out at 75% LTV, a 640+ score is expected, and lenders generally want about 12 months of hosting history. Coverage starts at 1.00 on purchases.
On coverage, 1.00 is where many select programs start. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Lower coverage generally means more equity, not less.
A Worked Example for a First-Time Investor
Run the numbers on a duplex listed near $350,000, bought at 75% LTV by a first-time investor with a 700 score. That is a 25% down payment. Say the rent covers the full PITIA at roughly 1.0x on a fully amortizing payment. On the interest-only payment, the same rent produces a somewhat higher ratio, in the neighborhood of 1.1x, because principal drops out of the test. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
That gap is the practical lesson. A deal that clears 1.00 only on the interest-only payment is thin, and a program that tests on the amortizing payment may ask for more cash down to shrink the loan and its payment. Put in more equity up front, or pick a property with more rent relative to price, if you want margin when the loan resets.
What Happens When the Interest-Only Period Ends?
Your payment goes up, sometimes sharply. Federal agencies describe this risk as payment shock. The OCC and other agencies’ consumer brochure warns borrowers they could face payment shock, and the Federal Reserve’s interagency guidance says payments may increase substantially at the end of an interest-only period. That guidance was written for consumer loans, so read it as context on the reset, not as a DSCR rule.
Before you sign, write down your exit plan:
- Refinance into a new loan before the window ends, which depends on your equity, credit, and rent at that point.
- Sell the property.
- Absorb the higher payment from rent growth or other cash.
Never assume you can refinance. Credit, value, and lending guidelines all shift over time.
Cash Beyond the Down Payment
Budget for four things: the down payment, closing costs, prepaid items, and reserves. Plan to fund the down payment and reserves from your own verified money. Closing costs and prepaids are the pieces seller credits may help offset, within program limits.
Reserves are the liquid funds a lender wants you to hold after closing. They vary by lender, leverage, loan size, and transaction type. About 6 months of PITIA is the common expectation on most files, and loans above $1,500,000 typically step up to about 9 months. Some conservative rate-and-term refinance files at modest leverage can see reserves waived, but a first-time purchase should plan on the full amount.
Then there is the gap between coverage and cash flow. DSCR compares rent to PITIA only. Repairs, vacancy, management, utilities, and capital expenses sit outside the calculation. A file that clears 1.00 is not automatically cash-flow positive, so hold extra cash for a first rental’s surprises.
Where Can the Down Payment Come From?
Your own verified funds are the cleanest source. Lenders source and document the money. Savings, proceeds from a sale, and similar documented assets work. Gifts are usually limited and depend on the program. DSCR lenders generally won’t let you borrow the down payment through a second lien at closing.
Seller credits can help with closing costs, but they are not a substitute for your down payment. Keep statements showing where the money sat before you apply, because lenders ask where large deposits came from.
Can You Put Less Down?
Rarely, and never to zero. A true no-money-down DSCR purchase is not realistic. The highest leverage in the network is the select 85% LTV tier, or 15% down, generally with a 700+ score. Government-backed low-down programs like FHA don’t apply to non-owner-occupied investment property.
Coverage below 1.00 is available through select lenders in the network, with leverage and terms adjusted. Expect more equity, not less. Some borrowers also confuse no-ratio structures with easy money. No-ratio is available only through select lenders, generally for borrowers who already own a primary residence.
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. One consequence is that DSCR loans sit in non-QM channels, where underwriting centers on the property’s rental income rather than the borrower’s personal income, and where interest-only structures may be available through select lenders.
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.
If You’re Short on Cash
Four moves to consider:
1. Buy a cheaper property. A lower price means a smaller down payment at the same LTV.
2. Choose a property with stronger rent for its price. Better coverage can open better leverage.
3. Raise your score. Moving from the 660 range into 700+ can unlock stronger tiers.
4. Wait and build reserves. A first rental with thin cash is the riskiest kind.
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.
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.
Key Terms Defined
LTV (loan-to-value): The loan amount divided by the property’s value. Your down payment is the remainder.
DSCR: Monthly rent divided by the monthly housing obligation. It measures whether the property’s income covers its payment.
PITIA: Principal, interest, taxes, insurance, and association dues. It is the full monthly obligation.
Interest-only period: A window where payments cover interest alone, so the balance does not fall from scheduled payments.
Reserves: Liquid funds held after closing, commonly counted in months of PITIA.
Payment shock: The jump in payment when an interest-only window ends.
Frequently Asked Questions
Can I buy a DSCR property with zero down?
No. A down payment is required. The highest leverage in the network is the select 85% LTV tier, which means 15% down, generally for 700+ scores. Most purchase files land at 20% to 25% down, subject to lender guidelines.
Does interest-only lower my down payment?
No. Leverage is set by the program’s LTV limits, credit tier, and coverage. Interest-only changes the payment tested for coverage, which can raise your ratio. It does not shrink the equity you owe at closing.
What credit score do I need?
A 620 floor exists in parts of the network. Most programs want around 660, and 700+ unlocks the strongest leverage tiers. Each file is reviewed individually.
How much down for a short-term rental?
Purchase leverage goes up to 75% LTV, so plan on 25% down or more. Expect a 640+ score and about 12 months of hosting history. Coverage starts at 1.00 on purchases. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Does a bigger down payment help my coverage ratio?
Yes. A smaller loan means a smaller payment, which can lift the ratio. It does not override leverage caps, credit floors, reserve rules, or property eligibility.
About Lendmire
As a non-QM mortgage broker (NMLS# 2371349), Lendmire facilitates DSCR investor loans across 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed around property-level rental income instead of personal income documentation, subject to lender guidelines, serving LLC-structured portfolios and self-employed borrowers who don’t fit conventional boxes. A two-time Scotsman Guide Top Mortgage Workplace (2025, 2026).
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References
1. OCC / interagency: Interest-Only Mortgage Payments and Payment-Option ARMs
2. Federal Reserve: Interagency Guidance on Nontraditional-Mortgage-Product Risks
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How DSCR Loan Size Limits Work for Portfolio Investors With Ten or More Doors · Does an Interest-Only STR Loan Help When DSCR Falls Below 1.0? · Can You Put 15% Down on a DSCR Loan for a Condotel Airbnb?
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.