The Quick Read: A brand-new short-term rental has no booking history, so projected income is usually the only basis available at purchase, and history takes over later for a refinance. Projected income comes from an appraiser’s short-term-rental analysis and sometimes a third-party market report, and lenders discount it before running the coverage test. Each basis has different strengths, and which one fits depends on whether you are buying now or can wait.
- A new build cannot show 12 months of hosting history, so projection is the purchase path.
- Many programs expect about 12 months of host experience, which a first-time STR owner may not have, so confirm the exception rules early.
- STR purchase leverage tops out at 75% LTV, and STR refinance leverage at 70% LTV, on the strongest files.
- The DSCR floor on both an STR purchase and an STR refinance is 1.00 on select programs, subject to lender guidelines.
- History earns its keep later: 12 months of real statements can support a refinance at actual numbers.
Here is the honest answer on who each option is for. Projected income suits you if you are buying or finishing a new build and want permanent financing in place without waiting a year. History suits you if you can stabilize first and then refinance on proven numbers, especially if the projection looks thin or the program won’t accept one. Neither is better in the abstract. The question is which one the property can support.
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.
Side-by-Side
| Factor | Projected Income | History Income |
|---|---|---|
| Review basis | Appraiser STR analysis, market report | Actual platform or bank records |
| Documentation | Appraisal addendum, data report | About 12 months of statements |
| Typical transaction | Purchase, new construction | Refinance, cash-out, existing STR |
| Property types | New builds, newly converted | Operating STRs with a record |
| Entity vesting | LLC possible, per program terms | LLC possible, per program terms |
| Timing | Available at completion | Available after a year of hosting |
| Reserve expectations | Commonly around 6 months of PITIA | Commonly around 6 months of PITIA |
| Main risk | Unproven forecast, thin comps | Slow start, seasonal dips |
Reserves vary by lender, leverage, and loan size. Treat the table as a map, not a promise. The complete DSCR loans guide walks through the mechanics that sit underneath both columns.
Projected vs. History Income, Defined
Projected income is an estimate of what a property will earn. History income is what it did earn. That is the whole distinction, and everything else follows from it.
A projection can come from two places. One is the appraiser, who prepares a short-term-rental analysis from comparable properties. The other is a third-party market report that estimates nightly rates and occupancy for the area. Some programs take one, some take both, and a few take neither.
History comes from platform statements, a property-manager report, or bank deposits covering a look-back period, commonly 12 months. Some programs also want proof that the listing was actively marketed. A new build cannot produce any of this on day one.
Here is a point many first-time buyers miss. Not every lender will use projections at all. Securitization due-diligence filings show one investor’s guideline carving out new construction, so that a newly built or recently converted STR does not need the 12-month look-back, provided the appraiser confirms an unrestricted STR market and supports it with an STR-based rent schedule. That is one program’s wording, not a universal rule. It does show that a named new-construction exception exists in some programs, and that others will not have one.
How a New-Build Projection Gets Built
The appraiser is the first source. Form 1007 (the single-family rent schedule) and Form 1025 (the 2-4 unit version) were designed for long-term rent. HousingWire argues that Form 1007 was built solely to estimate long-term monthly market rent, and that nightly pricing, seasonality, and management factors cannot be reported within it. So STR appraisers often add a separate narrative. Class Valuation describes a labeled short-term-rental projected income analysis addendum used in place of the 1007.
The comp set matters most. A fair comparison means similar bedroom count, similar amenities, similar location, and similar seasonality. A lakefront cabin with a hot tub should not be compared with an inland starter home. The sanity check is simple: would a guest consider both listings for the same trip?
Then comes the discount. Across our wholesale network, programs commonly reduce gross STR income before running the coverage test, so the number that counts is lower than the headline forecast. The size and name of that adjustment vary by program. A strong forecast shrinks even when everything checks out.
The New-Build Comp Problem
A new subdivision or fresh condo building often has no operating STRs nearby. The appraiser must reach farther, which weakens comparability. Thin-comp markets, such as seasonal, vacation, or rural areas, can mean tighter coverage requirements or lower leverage. Your forecast is only as good as its nearest comparable.
The Timeline: What Evidence Exists at Each Stage
Think of the file as a calendar with different income evidence at each stop.
- Before and during construction: only forecasts exist. Construction typically runs on a separate construction loan, because a DSCR loan is a permanent financing product, not a build loan.
- At completion: a certificate of occupancy or equivalent completion documentation is generally needed before a permanent DSCR closing. The appraiser’s STR analysis becomes the income evidence.
- First bookings: a new listing has no reviews and no ranking, so early results may lag the forecast.
- After about 12 months: statements exist, and a refinance can use actual results instead of a projection.
A delayed certificate of occupancy can delay or derail a permanent closing, so build slack into the plan.
When Projected Income Is the Better Fit
Projection is the stronger choice when the property’s story is easier to tell with forward-looking numbers than with a thin first year.
You want permanent financing at completion. If a construction loan is ending, projection lets the permanent loan replace it without waiting for a record.
The comps are strong. A well-established STR market with many close comparables gives the appraiser real support. The forecast then rests on actual neighboring performance.
The program has a new-construction path. If the lender accepts an appraiser’s STR analysis on purchases, you can use it. Ask this before you sign a purchase contract, not after.
Leverage is the priority. On a purchase, STR leverage reaches up to 75% LTV on the strongest files, while a refinance tops out around 70% LTV. Qualifying on projection at purchase can keep you in the higher-leverage tier. Strong credit helps here, with 640 as the STR minimum and higher scores opening better terms. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Be honest about the catches. Projection depends on the appraiser’s opinion, and a new build has no record to check that opinion against. If the program only takes long-term rent, the STR upside is ignored. Compare the coverage ratio under both bases before buying.
When History Income Is the Better Fit
History wins when you can afford to wait and the numbers will prove themselves.
The projection looks thin. If the long-term-rent fallback barely clears coverage and the STR forecast relies on optimistic occupancy, a year of real results may tell a better story, or an honest one.
You are refinancing. Loan-level reviews show the 12-month STR receipt requirement applied to refinances, not purchases, with the purchase income falling back to the lower of the market-rent schedule and any existing lease. For a refinance, history is the normal basis. STR refinance leverage runs up to 70% LTV, and a cash-out on STR collateral also tops out at 70% LTV. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
The program rejects projections. Some programs do not accept STR income on a purchase at all, and the rules differ widely. If the lender you want only takes history, the choice is made for you.
You need to prove the operation. Programs typically expect about 12 months of host experience. If you are a first-time host, a year of operating results can help satisfy that expectation on later files. Lenders review it case by case.
The downside is timing and cash. A year of holding costs, with the property supported by whatever financing bridges the gap, is a real expense. Do the math on the carry before assuming waiting is free.
The follow-on article on projected STR income versus booking history for a cash-out refinance covers what changes when you pull equity out.
What Happens When the Numbers Disagree
Disagreement is common on new builds. Your pro forma says one thing, the appraiser another, and the market report a third.
Programs usually settle it conservatively. One due-diligence exhibit shows a guideline to use the lower of multiple STR calculations, with an expense factor considered. Another filing shows a file where STR income was used without the required supplemental appraisal form, and the reviewer fell back to the lower long-term rent. Your own pro forma is a planning tool, not underwriting evidence.
The practical response is to run three scenarios before you commit:
1. The appraiser’s STR figure after the program’s discount.
2. A more conservative version with lower occupancy.
3. The long-term-rent fallback.
If all three clear the coverage minimum, the file is sturdy. If only the first does, you are leaning on one opinion.
Sub-1.00 coverage is a separate path. It is available through select lenders in the network, with leverage and terms adjusted, whereas 1.00 is where many select STR programs start.
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.
Which One Should You Choose?
This is a genuine toss-up for many buyers, so use criteria instead of a blanket answer.
Lean toward projection if the program accepts it, the comps are solid, the fallback rent still clears coverage, and you have reserves to absorb a slow first season. Lean toward waiting for history if the forecast depends on aggressive assumptions, the program will not take projections, or you can carry the property comfortably for a year.
Remember what the coverage ratio does and does not measure. DSCR compares rent to PITIA (principal, interest, taxes, insurance, and any HOA dues). Clearing 1.00 is not the same as positive cash flow, because repairs, vacancy, management, utilities, and capital expenses sit outside the calculation. A new STR carries extra startup costs on top.
A larger down payment lowers the monthly obligation and can lift the ratio. It does not erase leverage caps, credit floors, reserve rules, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.
Preconditions That Can Sink the File
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. If the use is restricted, the income may not support the loan at all.
Other gating items include the certificate of occupancy, a rent-ready property, and a property type the program accepts. Manufactured homes, log homes, and barndominiums fall outside these DSCR programs. Loan amounts run up to $3,000,000 on standard programs, and above $2,500,000 the network generally holds to 30-year fixed structures.
Entity documents matter if you vest in an LLC. Formation documents, the operating agreement, proof of signing authority, and an EIN are standard, subject to lender program eligibility. The entity’s age is not the test, and the mechanics are the same for a new build as for an existing property.
Key Terms Defined
DSCR (debt service coverage ratio): the property’s qualifying income divided by its monthly housing payment.
PITIA: principal, interest, taxes, insurance, and association dues, the full monthly obligation.
LTV (loan-to-value): the loan amount as a percentage of the property’s value.
Certificate of occupancy: the document confirming a completed building can be lived in or rented.
Seasoning: the waiting period or track record a program wants before a certain transaction.
Form 1007 / Form 1025: appraisal rent schedules built for long-term rent on one-unit and 2-4 unit properties.
Document Checklist for a New-Build STR File
- Certificate of occupancy or completion documentation
- Appraisal with an STR analysis or addendum
- Third-party market report, if the program uses one
- Permits and proof the use is allowed locally
- Entity documents and EIN, if vesting in an LLC
- Evidence of reserves and a hosting or landlord record, if the program asks for it
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.
Frequently Asked Questions
Can a new-build STR qualify with no booking history?
Yes, on programs that accept an appraiser’s STR analysis for purchases, and acceptance varies by lender and program. Others fall back to the lower long-term rent or require history. Ask the question before you contract, since a lender’s answer changes your leverage and coverage.
Does a DSCR loan fund the construction itself?
No. A DSCR loan is permanent financing that replaces a separate construction loan after completion. The certificate of occupancy typically comes first.
Will the lender use my own pro forma?
Generally no. Lenders lean on an appraiser’s analysis or an approved market source, then discount it. Your pro forma helps you plan but rarely counts as underwriting evidence.
Can I buy the new build in an LLC?
Often yes, subject to program terms. The entity’s age is not the test, and documents plus a guarantor review are what matter.
When does actual history take over?
After roughly 12 months of hosting, a refinance can use real statements instead of a projection. STR refinances run up to 70% LTV, and STR cash-outs also top out at 70% LTV, subject to lender guidelines.
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. A call to 828-256-2183 or a quote request starts that comparison. Lendmire is a broker that arranges these loans through select lenders in its wholesale network across 41 markets, including Washington, D.C., and nothing here is a commitment to lend.
A new build’s income story starts as a forecast and ends as a record, and the smartest files plan for both from the first day of construction.
For current guidelines and terms, see Lendmire’s DSCR loan programs page.
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. SEC EDGAR ABS-15G (Morgan Stanley Capital I)
2. HousingWire – STR appraisal playbook
3. Class Valuation – Form 1007 and STR
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 Many Months of Booking History Does an STR Loan Need? · How to Qualify for a DSCR Loan in Mississippi · How to Qualify for a DSCR Loan in New Jersey
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.