The Quick Read: Usually at least 25% down, because short-term rental collateral on a purchase typically tops out at 75% loan-to-value through select wholesale programs, even in loan sizes where a long-term rental could reach 80%, and the required equity climbs as the loan grows, subject to underwriting and lender guidelines. The cash you bring is simply the price minus the loan the property can support. Several factors move that number, including loan size, credit score, property type, coverage, and transaction type.
- Short-term rental purchases typically cap at 75% LTV, so 25% down is the working floor.
- Short-term rental loans stop at $2,000,000, and income is counted at 80% of gross.
- Coverage of 1.00 or better is required on short-term rental files.
- Condotels and non-warrantable condos cap at 75% on a purchase and $1,500,000, and condotels also need $250,000 cash-in-hand.
- Down payment, closing costs, and reserves are three separate pots of cash.
What “Luxury” Means to a DSCR Lender
Luxury is not a category in the underwriting guidelines. Lenders see loan size, property type, and income evidence. A high price tag matters because it pushes the loan into a larger band, and each band has its own leverage ceiling and credit floor.
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.
“Super jumbo” works the same way. No regulator defines it. It is industry shorthand for large-balance investor loans, and the wholesale network Lendmire works with sizes these loans from $150,000 to $10,000,000. The standard DSCR program stops at $3,000,000, and the larger ladder carries qualified investors past that point.
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. The file qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. For a first read on how that works, see the complete DSCR loans guide.
The Leverage Ladder: Down Payment by Loan Size
Leverage steps down as the loan grows, so the down payment percentage steps up. The table shows best-case purchase leverage at 1.00 coverage or better, through select wholesale programs. Every figure is a ceiling, subject to underwriting.
| Loan amount | Long-term rental purchase | Minimum down | Credit floor |
|---|---|---|---|
| $150K to $1M | 80% LTV | 20% | 660+ |
| $1M to $1.5M | 75% LTV | 25% | 700+ |
| $1.5M to $3M | 75% LTV | 25% | 720+ |
| $3M to $4M | 65% LTV | 35% | 700+ |
| $4M to $10M | 60% LTV, on review | 40% | 700+ |
Short-term rentals sit on a tighter grid than that ladder. On a purchase, short-term rental collateral typically caps at 75% LTV in every band where it is offered. In the lowest band, a long-term rental can reach 80% and a short-term rental generally cannot.
Short-term rental files also end at $2,000,000 in loan amount. The 65% and 60% rows above apply to long-term rentals. They are shown so you can see where a larger luxury purchase lands if the property will not be run as a short-term rental.
Above $4,000,000, every request is reviewed case by case before submission. These are purchase or rate-and-term requests only, with no cash-out.
How Short-Term Rental Income Changes the Equity Math
The down payment is a leverage question. Whether the loan works at all is a coverage question. On a short-term rental, coverage is built from the income side in a way that cuts the number you start with.
A DSCR is monthly rent divided by the full monthly obligation: principal, interest, taxes, insurance, and any HOA dues. On a short-term rental purchase, the income comes from the short-term-rent analysis in the appraisal. On a refinance, it comes from twelve months of operating history. Either way, the file counts the income at 80% of gross, and coverage must come in at 1.00 or higher.
Short-term rental files cannot use the no-ratio path. They also need an experienced investor, meaning twelve months of owning income property in the last thirty-six.
Here is why that matters at luxury prices. Rents often lag purchase prices in resort markets. A property can fit under the 75% leverage cap and still fail on coverage once income is cut to 80% of gross. A larger down payment shrinks the loan and lifts coverage. Many luxury files end up with more than the minimum down because the ratio demands it, not the LTV cap.
Picture an investor buying in the $1.5M to $2M loan band. The cap allows 75% LTV and the credit floor is 720. The appraisal’s rent analysis, cut to 80%, covers the payment at only 0.92. The leverage cap is not the problem. This file needs either a smaller loan or a different path, and it is a poor fit for an STR program that requires 1.00. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
What Moves the Number
Five factors set the final down payment.
- Loan amount. Each band has its own LTV ceiling. Crossing $1,000,000, $3,000,000, or $4,000,000 raises the equity required.
- Credit score. The floor is 660 on smaller loans, 700 above $1,000,000, and 720 between $1,500,000 and $3,000,000. Above $3,000,000, 700 comes with clean housing history and 48-month event seasoning.
- Coverage. At 1.00 or better, leverage is at its fullest. Coverage from 0.75 to 0.99 is a real path to $2,000,000 through select lenders in the network, but LTV and terms adjust, subject to underwriting. Short-term rental files need 1.00.
- Property type. Warrantable condos fit the standard grid. Non-warrantable condos cap at 75% and $1,500,000. Condotels cap at 75% on a purchase and 65% on a refinance, at $1,500,000, with $250,000 cash-in-hand.
- Transaction type. Purchases run higher than cash-out. Cash-out on short-term rental collateral generally tops out at 70%.
Across the wholesale network, the strictest overlays show up on non-warrantable condos and on files with thin documentation. A few lenders will stretch on one factor if another is strong. Most want everything clean at once.
Three Luxury Scenarios
These use bands and percentages, not dollar figures, so you can map them to your own price.
Strong coverage, single-family, mid band. A $1.5M to $2M loan, a 725 score, and coverage of 1.15 on income counted at 80% of gross. The leverage cap is 75%, so the down payment is 25%. Two appraisals are required above $2,000,000, which does not apply here. Reserves run six months of PITIA on the subject property.
Resort condo. A condotel purchase with a loan near $1,400,000. The cap is 75% LTV, so 25% down, and $250,000 of cash-in-hand is required on top. The cash-in-hand rule is easy to overlook. It makes a condotel a bigger cash commitment than the LTV suggests. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Coverage short at the cap. The same single-family property, but coverage lands at 0.94. A short-term rental file needs 1.00, so the investor has three options. Put more down, which is the cleanest fix. Run the property as a long-term rental and request a sub-1.00 program through select lenders, with LTV and terms adjusting, subject to underwriting. Or choose a different property.
Total Cash: Down Payment Is Not the Whole Number
Three separate pots of cash sit under every file: the down payment, closing costs, and reserves. Investors who budget only for the first one get surprised.
Reserves are typically six months of PITIA on the subject property, and twelve months for a first-time investor, though short-term rental files need an experienced investor anyway. No extra reserves are required for other financed properties, and an investor can hold up to twenty financed properties. Reserves must be documented, and proceeds from a cash-out cannot be used to satisfy them on the largest files.
Business-purpose DSCR files do not follow consumer disclosure formats, so budget for closing costs from your own quotes rather than expecting a standardized estimate.
Where the Down Payment Can Come From
Most luxury investors fund the down payment from one of three places: liquid assets, a cash-out refinance on another property, or a sale. A cash-out on another property needs to be completed and seasoned before it counts as your funds. On cash-out, proceeds are unlimited at or below 60% LTV, capped at $1,500,000 above that, and unavailable above $3,000,000. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Borrowed funds are another matter. Programs differ on whether a HELOC draw is acceptable as a down payment source, so ask before drawing. Plan on a paper trail for every dollar, with statements showing the funds sitting in an account in the borrower’s or entity’s name.
Lendmire’s piece How Much Down Payment For A Short Term Rental? covers the baseline case before the luxury bands apply. For purchase versus cash-out leverage on short-term rental collateral, see Lendmire’s explainer Short-Term Rental DSCR Down Payment Rules on a Purchase vs Cash-Out.
Ways to Lower the Cash You Need
Honest options only. Zero-down DSCR loans are not a real product, and most lenders require borrower equity.
1. Shrink the loan to fit coverage. A bigger down payment lifts the ratio, so sometimes more cash up front is what makes a file work.
2. Stay in a lower band. Staying at or below $1,000,000 in loan amount keeps the long-term-rental ladder at 80%, though short-term rental collateral generally stays at 75%.
3. Pick warrantable. A condo that meets warrantable rules avoids the 75% and $1,500,000 non-warrantable caps.
4. Raise credit before applying. Several bands step up their credit floors, and a score that clears a floor keeps the full leverage cell available.
5. Use an entity. Entity vesting is welcome on these files, without layered entities, subject to program terms.
6. Sequence a cash-out first. Pulling equity from an existing property lets you buy without liquidating other assets.
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.
Risks and Traps
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. The file needs municipal permission documented for the specific property. A lender will not assume it from the city or state.
A new build has no operating history. DSCR is a permanent take-out loan, not construction financing, so the income evidence on a vacant property rests on the appraisal’s rent analysis alone.
The DSCR ratio also ignores real costs: repairs, vacancy, management, utilities, and capex. Low occupancy can leave the owner carrying the gap even when the file clears 1.00.
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.
How the Appraiser’s Rent Form Differs
On a conventional investment property, appraisers use Fannie Mae’s Form 1007, the Single-Family Comparable Rent Schedule, to estimate long-term market rent. It sits in the Fannie Mae forms index next to the multi-unit equivalent. Fannie Mae has also published appraiser guidance on short-term rentals and Form 1007. These are contrast points only. They govern conventional loans, not DSCR files, and DSCR down payments come from the program grid above.
Key Terms Defined
LTV (loan-to-value): The loan amount divided by the property’s value or price, whichever is lower.
DSCR (debt service coverage ratio): Monthly rental income divided by the full monthly obligation on the property.
PITIA: Principal, interest, taxes, insurance, and association dues, the full monthly cost of holding the loan.
Condotel: A condo unit in a building run like a hotel, often with a rental pool or front desk.
Cash-in-hand: Liquid funds the borrower must hold after closing, separate from the down payment.
Non-warrantable condo: A condo project that falls outside standard project-approval rules, often because of high investor concentration or pending litigation.
Frequently Asked Questions
Can I put less than 25% down on a luxury short-term rental?
Rarely. Short-term rental collateral on a purchase typically caps at 75% LTV through select wholesale programs. Long-term rentals in the lowest loan band can reach 80%, which is where some older program summaries get the 20% figure. Programs change, so confirm the current grid before you plan around it, subject to underwriting.
Does the down payment go up on larger luxury loans?
Yes, in steps. Long-term rental purchases hold at 75% through $3,000,000, then drop to 65% from $3,000,000 to $4,000,000 and 60% on review above that. Short-term rental files end at $2,000,000 in loan amount, so that step-down matters mainly if the property will not run as a short-term rental.
What if the rent does not cover the payment at 1.00?
A short-term rental file needs coverage of 1.00 or higher, with income counted at 80% of gross. A larger down payment is the most direct fix. Another path is a long-term-rental request, since select lenders review coverage below 1.00 with adjusted LTV and terms, subject to underwriting.
Are reserves part of the down payment?
No. Reserves are separate and typically six months of PITIA on the subject property, and twelve months for first-time investors. Closing costs are a third pot. A condotel adds a $250,000 cash-in-hand requirement on top of all three.
Can I use a HELOC or cash-out on another property for the down payment?
A completed, seasoned cash-out refinance is a common source. Borrowed funds from a HELOC are treated differently by different programs, so ask before drawing. Document every dollar’s path into the account.
Next Step
If you are buying or refinancing a high-balance rental property and want to see how the numbers work, Lendmire can help you compare super jumbo DSCR loan options based on the property income, the loan balance, credit profile, leverage, and investor goals. Lendmire is a broker that arranges financing through select lenders in its wholesale network across 41 markets, including Washington, D.C. Nothing here is a commitment to lend. Every file is underwritten individually.
Lendmire’s self-employed mortgages page presents both super jumbo programs, bank statement and DSCR, side by side.
About Lendmire
A DSCR-focused mortgage broker, Lendmire (NMLS# 2371349) places investor financing across 41 markets — 40 states plus Washington, D.C. — with DSCR eligibility generally reviewed by the lender on property cash flow instead of tax returns, subject to lender guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in 2025 and 2026.
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References
1. Fannie Mae Form 1007, Single-Family Comparable Rent Schedule
2. Fannie Mae Selling Guide forms index
This article is part of Lendmire’s super jumbo DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How Much Can You Borrow With a Luxury Short-Term Rental DSCR Loan? · How to Buy a Luxury Rental in an LLC With a DSCR Loan · How to Qualify a Portfolio Luxury Rental Using a 10-Year IO DSCR Loan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.