These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
The Quick Read: Rarely. For a short-term rental purchase, the network’s strongest files reach up to 75% LTV, which means at least 25% down, so 15% down is not an option on a vacation rental purchase. The 85% LTV tier exists for long-term rentals at roughly a 700+ score, but it does not carry over to STR collateral. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
- STR purchase leverage tops out at 75% LTV, so plan on 25% down at minimum.
- STR files typically expect a 640+ score and about 12 months of hosting history.
- First-timers are usually asked for more reserves than seasoned investors.
- Rent coverage starts at 1.00 on select STR programs, and stronger ratios open better terms.
- Cash-out and refinance on an STR run lower, up to about 70% LTV.
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.
Why the Answer Is Different for a Short-Term Rental
The 15% figure belongs to a different product. Across the wholesale network, long-term rental purchases can reach 80% LTV on most files, and select high-leverage programs push to 85% with roughly a 700+ score. Short-term rentals sit in a separate lane with a lower ceiling.
Two things drive that. Vacation rental income is less predictable than a signed lease. And a first-time buyer has no operating record to show a reviewer. Lenders respond by asking for more equity, not less.
AirDNA’s financing guide reports that STR down payments generally run from about 15% to 25%, and that lenders may use conservative STR income estimates. The BiggerPockets blog adds that purchase DSCR loans need a down payment well above owner-occupied loans, and that borrowers should confirm they can cover both the down payment and reserves. Those are market-wide ranges. Within the network, STR purchase tops out at 75% LTV.
Here is the flip point. If the property would be rented on 12-month leases rather than as a short-term rental, the leverage conversation changes, and 15% down becomes a real question for strong credit. An investor who is flexible on strategy should price both paths. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Key Terms Defined
DSCR: The debt service coverage ratio, which compares the property’s rent to its full monthly obligation.
PITIA: Principal, interest, taxes, insurance, and association dues, the payment the rent is measured against.
LTV: Loan-to-value, the loan amount as a percentage of the property’s value; down payment is 100% minus LTV.
Reserves: Liquid cash left after closing, usually counted in months of PITIA.
Hosting history: A track record of operating a short-term rental, which STR programs typically want to see for about 12 months.
How Much Down Does an STR Purchase Actually Need?
Plan on at least 25% down for a short-term rental purchase, and treat that as the best case. Up to 75% LTV is available on the strongest files. Weaker credit, thinner coverage, or a pricier loan size can pull the ceiling lower. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Refinances run tighter. STR refinance leverage runs around 70%, and STR cash-out tops out at 70% LTV. A standard rental cash-out, by contrast, reaches about 75%. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
The table below sets the pieces side by side. All figures are typical ranges on select programs in the network, subject to lender guidelines and not a commitment to lend.
| Factor | STR purchase | STR refinance / cash-out | Long-term rental purchase |
|---|---|---|---|
| Max LTV | Up to 75% | About 70% | 75%-80% typical; 85% select |
| Min credit | 640+ | 640+ | ~660 typical; 700+ for top tier |
| Coverage start | 1.00 | 1.00 | 1.00 on select programs |
| History | About 12 months hosting | About 12 months hosting | Not required |
The 85% tier is a long-term rental feature. Putting 15% down on a vacation rental is not a purchase option here. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
What Changes for a First-Time Buyer
Same math, more cushion. A first-time investor is underwritten on the property’s rent, not on personal income, so being new does not by itself block a file. The gap shows up in two places.
First, hosting history. STR programs typically expect about 12 months of host experience. A genuine first-timer may not have it, which narrows the field to select lenders or pushes the buyer toward the long-term rental path while a record builds.
Second, reserves. Reserves vary by lender, leverage, loan size, and transaction type, and they commonly run around 6 months of PITIA. Lendmire’s first-time investor guide notes that first-timers are typically asked for more, often twelve months.
Here’s the catch. For a first-timer, reserves can matter more than the down payment. Buyers who drain cash to hit the equity target and then fall short on reserves lose the file anyway.
How the Rent Estimate Decides the Ratio
STR income is set from one of two places: trailing platform statements, or a third-party projection such as AirDNA. The brokerage’s complete DSCR loans guide explains how STR files use projections or historical income, while long-term rentals use a market-rent appraisal or a lease. For those, the rent schedule typically comes from Form 1007 on a single-family home or Form 1025 on a 2-4 unit property, per RentalRealEstate.com, which also notes that no W-2s feed the ratio. The lender qualifies the file primarily on property-level rental income covering the payment, subject to lender guidelines.
Projections are often trimmed. A reviewer may not give credit for peak-season annualization, so run the numbers on a full year, not on July. For a first-timer with no statements, the projection carries the whole file. For the difference between those two income sources, see Lendmire’s piece AirDNA Projections vs Airbnb Statements for a First-Time STR Buyer.
The ratio is rent divided by PITIA. A bigger loan means a bigger PITIA, which lowers coverage. So a thin-margin STR can be pushed out of its best tier by leverage alone. Clearing 1.00 also does not mean positive cash flow. DSCR compares rent to PITIA only; repairs, vacancy, management, utilities, and capex all sit outside it.
A Side-by-Side Worked Example
Run the numbers on a hypothetical $400,000 vacation rental. The figures are modeled assumptions, not market data.
| Scenario | Down payment | LTV | What happens |
|---|---|---|---|
| A | 25% | 75% | Within the STR purchase ceiling |
| B | 30% | 70% | Smaller loan, higher coverage |
| C | 15% | 85% | Above the STR purchase ceiling |
Scenario C does not work as an STR purchase. The loan would exceed the 75% cap no matter how strong the rent looks.
Scenario B is worth a look when the projection is borderline. A larger down payment lowers the payment and can lift coverage, say from just above 1.00 to something closer to 1.2x. But extra equity never erases the credit floor, the reserve rules, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.
Total Cash Needed at the Closing Table
Budget these together, not one at a time:
- The down payment, at least 25% on an STR purchase.
- Closing costs.
- Reserves, commonly about 6 months of PITIA and often more for a first-timer.
- Furnishing and startup costs for the rental, which sit outside the loan.
Buyers who fixate on the down payment percentage tend to underestimate the total. A lower-leverage file that leaves healthy reserves is often stronger than a maximum-leverage file that leaves none.
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.
Does the Property Itself Qualify?
Run these checks before requesting terms:
1. Credit score at 640 or higher, with higher scores opening better leverage. 2. A rent estimate that clears 1.00 on a full-year basis. 3. Hosting history, or a plan for the long-term rental path if it is missing. 4. A property type the programs accept. Manufactured homes, log homes, and barndominiums are not offered through these programs. 5. Legal operation. 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. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Fifth item first, really. A great ratio on a property that cannot legally host guests is not a file.
If 15% Isn’t Available, What Then?
There are three realistic moves.
Buy as a long-term rental first. That lane supports higher leverage and does not need hosting history. The property can later move toward STR use, and a refinance at that point runs around 70% LTV on STR collateral. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Build the record. Twelve months of hosting history on a first property makes the second STR purchase far easier. Some investors start with a smaller property for exactly this reason.
Put down more. Moving toward 30% can lift coverage and soften a conservative rent estimate.
A related point on coverage. Programs below 1.00 coverage are available through select lenders in the network, with leverage and terms adjusted, so they pull against a lean-down-payment goal, not toward it. A buyer reaching for sub-1.00 because the numbers do not work should re-examine the property, not the loan type.
DSCR Versus Conventional for a First-Timer
| Factor | DSCR | Conventional investor loan |
|---|---|---|
| Reviewed on | Property rental income | Personal income and DTI |
| Entity ownership | Often allowed, subject to program guidelines | Usually personal name |
| Documents | Credit, assets, entity papers, title, appraisal | Traditional personal-income documentation, W-2s |
Neither is automatically better. A salaried buyer with strong traditional employment income and a single rental may find conventional financing cheaper. A self-employed buyer, an LLC owner, or someone with several financed properties usually finds DSCR the cleaner fit.
Mistakes First-Timers Make
- Treating 15% as the standard. It is not, and on an STR purchase it is out of range.
- Using peak-season revenue as the rent estimate.
- Skipping the legality check on the address.
- Spending cash on the down payment and leaving too little for reserves.
- Forgetting prepayment terms, which are common on DSCR loans.
- Equating a 1.00 coverage ratio with positive cash flow.
Frequently Asked Questions
Is there any way to get 85% LTV on a short-term rental?
Not on a purchase. STR purchase leverage tops out at 75% LTV on the strongest files. The 85% tier belongs to select long-term rental programs at roughly a 700+ score. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Do I need prior landlord experience to buy an STR?
STR programs typically expect about 12 months of hosting history. Without it, options narrow to select lenders or to starting on the long-term rental path. Qualification stays subject to lender guidelines.
Does a bigger down payment improve my chances?
It can lift the coverage ratio by shrinking the loan, which helps when the rent estimate is conservative. It does not replace the 640+ credit expectation, reserve requirements, or property eligibility.
What credit score do I need?
STR files typically want 640 or higher. Higher scores unlock better leverage and terms. Exact thresholds depend on the lender, the property, and the loan size.
Are no-ratio loans an option for a first-timer?
No-ratio structures are available only through select lenders, generally for borrowers who already own a primary residence. They are not a shortcut around leverage limits and are not an obvious fit for a first-time buyer.
Next Step
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. Programs change and every file is reviewed individually, so none of the figures here are a commitment to lend.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage focused on DSCR investor financing, helping arrange programs through wholesale and investor-lending channels in 41 markets, including Washington, D.C. DSCR loans are evaluated by the lender on property cash flow rather than personal income, subject to lender guidelines, supporting LLC closings and accommodating investors with four or more financed properties. Scotsman Guide Top Mortgage Workplace in both 2025 and 2026.
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References
1. AirDNA: How to Finance Your Vacation Rental
2. BiggerPockets: Explaining DSCR Loans and Why Many New Investors Overlook Them
3. RentalRealEstate.com: DSCR Loans
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 Much Down Payment Does a DSCR Loan in Washington Require? · How Much Down Payment Does a DSCR Loan in Washington, DC Require? · How Much a First-Time Buyer Needs to Close an Airbnb DSCR Loan
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.