Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
The Quick Read: Rarely, and on a short-term-rental purchase almost never, because the strongest short-term-rental purchase files across the network top out at 75% loan-to-value, which means at least 25% down. First-time status mostly changes your terms, not whether you can apply. Plan around 25% down or more, and treat any “under 20%” or “no money down” pitch as a claim to verify, not a program to count on. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
- Purchase leverage: short-term-rental purchases reach up to 75% LTV on the strongest files, so the down payment is 25% or more.
- Credit: a 640 score is the typical floor on short-term-rental files, and higher scores open better leverage.
- Coverage: purchase files start at 1.00 coverage, and refinances have their own separate 1.00 floor.
- Experience: about 12 months of host or landlord history is typically expected, which is the hard part for a first-timer.
- Cash: the down payment is only part of the cash you need.
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.
Key Terms Defined
DSCR (debt service coverage ratio): the property’s counted rent divided by its full monthly obligation. At 1.00, rent exactly covers the payment.
PITIA: principal, interest, taxes, insurance, and any HOA dues. It is the payment side of the DSCR math.
LTV (loan-to-value): the loan balance as a percentage of the property’s value or price. The down payment is 100% minus LTV.
Reserves: liquid cash you hold after closing, usually counted in months of PITIA.
Haircut: a discount a lender applies to gross rental income before running the ratio.
Business-purpose loan: 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.
Why Does STR Leverage Sit Below Long-Term Rentals?
Because a signed lease is predictable and a booking calendar is not. Lenders price that uncertainty by capping how much they will lend against a short-term rental.
AirDNA, the short-term-rental data company, notes that DSCR loans qualify on the property’s income and often need larger down payments than conventional mortgages. It also says lenders tend to use conservative income estimates because the market is volatile. Its guide reports that DSCR loans on short-term rentals can demand 20–30% down, depending on credit score and projected vacancy.
Here is how that lines up with the programs we place files with. Across our wholesale network, short-term-rental purchase leverage tops out at 75% LTV on the strongest files. Refinances and cash-outs on short-term-rental collateral run lower, up to 70% LTV. Standard long-term rentals reach higher leverage than short-term rentals, and that gap is the whole reason this question is hard. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
AirDNA also cites 1.25 or higher as a typical coverage target. In the network, short-term-rental purchase files start at 1.00 coverage. A stronger ratio opens better pricing and leverage, so a file sitting at the floor has less room to negotiate.
A weak ratio, a seasonal market, or no hosting experience pushes your down payment up. It does not push it down.
How Does a Brand-New STR Get Its Income Counted?
Without hosting history, the lender needs an estimate. Most programs accept one of three inputs: a market projection report, an appraiser’s short-term-rental analysis, or trailing platform statements on an existing listing. A first-time purchase leans on the first two. Refinances lean on the third.
This is where files go sideways. Fannie Mae’s Selling Guide describes Form 1007 as the comparable rent schedule for a one-unit property, and its forms list also names Form 1025 for small multi-unit properties. DSCR loans are not agency products. These forms matter only because many appraisal orders default to them.
Class Valuation, an appraisal-management firm, argues that Form 1007 measures long-term rent only. Using it for a vacation rental can produce an artificially low DSCR. Its recommendation is to put short-term-rental income in a narrative addendum.
A lender that counts only long-term rent can understate a good short-term rental. You then either bring more cash or switch to a lender that reads short-term-rental income properly. Across the network, programs differ here, which is one reason a broker who can compare many lenders earns their keep. For the income side in detail, see Lendmire’s explanation of how a first-time buyer’s Airbnb income is sized for coverage.
Then there is the haircut. A lender may discount gross short-term-rental revenue before running the ratio. The payment side gets no discount. So a property can look strong on gross bookings and thin on the number the lender actually uses.
What Does a Bigger Down Payment Do to Coverage?
It lowers the loan balance, which lowers the payment, which lifts the ratio. It does not lift your leverage cap or erase a credit floor.
Run the numbers this way. These are modeled assumptions, not market data. Say a property clears about 1.05x at 75% LTV. Assume taxes and insurance make up roughly a fifth of the full obligation and stay flat. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
| Down payment | LTV | Modeled coverage |
|---|---|---|
| 25% | 75% | about 1.05x |
| 30% | 70% | roughly 1.10x |
| 35% | 65% | roughly 1.18x |
Each extra five points of equity buys a modest lift. That is useful if you sit just under a program’s floor. A file at 0.97x on a modest down payment may clear 1.00 with more cash in.
The lever only works in one direction. Putting less than the minimum down lowers coverage, and no ratio will pay for leverage the program does not allow. The strongest files clear both tests: enough equity and enough rental coverage.
Coverage below 1.00 is a separate path. It is available through select lenders in the network, with leverage and terms adjusted. Expect more cash down there, not less.
What Would a Lower-Down File Have to Look Like?
On a short-term rental, the file would need to be near-perfect, and even then 75% LTV remains the ceiling. Where more leverage exists at all, it sits on standard long-term rentals with strong credit, not on vacation rentals. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Here is what lenders in the network look for when they weigh short-term-rental leverage:
- Credit: about 640 is the floor on short-term-rental files. Most programs want closer to 660, and 700 or higher unlocks the strongest tiers.
- Coverage after the haircut: a ratio at or above 1.00, with cushion.
- Reserves: commonly around 6 months of PITIA, though they vary by lender, leverage, loan size, and transaction type. Loans above $1,500,000 typically step up to about 9 months.
- Experience: about 12 months of host or landlord history is typically expected. If you have none, ask early which programs accept a projection in its place.
- Property type: manufactured homes, log homes, and barndominiums are not offered in the network’s DSCR programs.
- Loan size: standard programs run up to $3,000,000.
Practitioners often say first-time investors can take a leverage reduction or a pricing hit instead of a denial. That fits what we see. Strong reserves and a clean mortgage history are compensating factors that may support the file. They do not move a hard cap.
The honest answer on borrowed down-payment funds is that programs differ. Ask before you draw on anything.
What Does It Cost Beyond the Down Payment?
Plenty. Closing costs, reserves, furnishing, and setup all sit outside the loan.
A vacation rental has to be guest-ready before the first booking. That means furniture, linens, kitchen supplies, and photos. None of that comes from loan proceeds. Reserves also need to be sitting in your account after closing, not spent on the down payment.
Then there is the gap DSCR ignores. The ratio compares rent to PITIA only. Repairs, vacancy, management, utilities, and capital expenses sit outside it. Clearing 1.00 does not mean positive cash flow. A loan can pass underwriting while your own account carries the shortfall in a slow month.
Model it twice. Run the haircut short-term-rental projection, then run long-term market rent as the fallback. If the second number terrifies you, the first one is not a plan.
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.
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.
Is This Right for You? A Quick Checklist
You are a reasonable candidate if you can answer yes to most of these:
- You have 25% down plus closing costs, reserves, and setup cash, all separate.
- Your credit sits at or above the 640 floor, ideally 700 or higher.
- The property clears 1.00 coverage on a haircut projection, not just gross income.
- You live somewhere else. DSCR is for non-owner-occupied property, not a home you will occupy.
- You have confirmed the property can legally operate as a rental. 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. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
You should probably wait if you are stretching for the minimum, the projection is the only thing holding the ratio up, or you have no reserves left after closing. Buying a long-term rental first builds mortgage and landlord history. Partnering with someone who has hosting experience is another route.
Not glamorous. Often smarter.
What About “No Money Down” and “10% Down” Claims?
These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Treat them as unverified. DSCR means no personal income documentation, with qualification running on the property’s income. It does not mean no down payment.
When a page advertises very low down payments, it is usually describing a creative structure, such as seller financing, a partner contributing equity, or a different loan type. It is not a lender waiving its leverage cap. The mortgage rules do not set a down-payment floor for these loans. Each program sets its own, and across the network the short-term-rental purchase ceiling is 75% LTV.
If someone promises more, ask for the written guideline and read the property type, credit tier, and transaction type it applies to. A figure attached to a primary residence or a long-term rental says nothing about a vacation rental.
Frequently Asked Questions
Can a first-time investor get a DSCR loan on an Airbnb at all?
Generally yes. Most programs allow it, usually with adjusted terms. Some want prior homeownership or mortgage history, and a few expect hosting experience. The network’s short-term-rental files typically look for about 12 months of host or landlord history, so a first-timer should ask which programs accept a projection instead.
Will a higher credit score get me below 25% down on a short-term rental?
No. Credit moves you between tiers and pricing, but it does not break the 75% LTV ceiling on short-term-rental purchases. A 700 or higher score gets you to the strongest tier available, which is the 75% cap. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Can I use projected Airbnb income instead of actual history?
Often, on a purchase. Lenders usually accept a market projection report or an appraiser’s short-term-rental analysis and may discount it. Refinances typically need actual trailing platform history. Acceptance varies by program.
Does putting more down help if my coverage is under 1.00?
It can. A lower balance means a lower payment, which lifts the ratio. Below-1.00 coverage is available through select lenders in the network, with leverage and terms adjusted, so more equity is usually part of that conversation.
Does clearing 1.00 mean the property will cash flow?
No. The ratio counts rent against PITIA only. Vacancy, repairs, management, utilities, and capital expenses sit outside it, so you still need your own cash-flow model.
What to Do Next
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. Lendmire is a broker arranging financing through select lenders in its wholesale network across 41 markets, including Washington, D.C. Qualification is subject to lender guidelines. This is not a commitment to lend. For the full picture of how these loans work, read the complete DSCR loans guide.
A first-time buyer who plans for 25% down and a haircut projection is rarely surprised at the closing table. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Investors focused on short-term rentals can review DSCR loans for Airbnb and short-term rentals.
For current guidelines and terms, see Lendmire’s DSCR loan programs page.
About Lendmire
As a DSCR and non-QM mortgage broker, Lendmire — NMLS# 2371349 — connects investors with wholesale lending channels across 41 markets, including Washington, D.C. The property’s rental income, not the borrower’s tax returns, is central to lender review, which works for self-employed operators and portfolios beyond four financed properties. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. AirDNA – Quick Guide to STR Financing
2. Fannie Mae Selling Guide B4-1.2-01
3. Fannie Mae Selling and Servicing Guide Forms
4. Class Valuation – Appraisal Form 1007 and 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 Much Down Payment Does a DSCR Loan in Kentucky Require? · How DSCR Down Payment Seasoning Rules Work for a First-Time Rental Buyer · Suburban vs Resort Airbnb on a DSCR Loan in Florida
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.