The Quick Read: Yes. On a short-term-rental purchase, select lenders in the network cap leverage at up to 75% LTV, so you put down at least 25% plus closing costs and reserves. A cash-out has no down payment at all, only a 70% LTV cap on short-term-rental collateral that leaves you 30% equity in the property. Every figure here is subject to lender guidelines, not a commitment to lend.
- Purchase: you bring cash. The down payment is the price minus the loan.
- Cash-out: you bring equity. The loan must pay off the old one, cover costs, and still fit under the cap.
- Both: short-term-rental files typically want a 640+ credit score and about 12 months of hosting history.
- Both: the rent still has to cover the payment. Equity alone is not enough.
Here is the honest answer on who each option is for. A purchase suits you if you have cash to deploy and want a new property. A cash-out suits you if you already own an Airbnb with equity and want to pull some of it out. They are different transactions, and the leverage limit sits at a different number on each.
DSCR Cash-Out Calculator
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Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Oct 8, 2026
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As of Oct 8, 2026 · General Freddie Mac market benchmark, not a Lendmire loan offer. Property value, balance, taxes, and insurance are editable estimates. Maximum loan-to-value varies by lender, program, property type, and seasoning. 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
These are typical ranges across select lenders in Lendmire’s wholesale network for short-term-rental collateral. Programs change, and every file is underwritten individually.
| Factor | Airbnb Purchase | Airbnb Cash-Out |
|---|---|---|
| What you bring | Down payment in cash | Existing equity |
| Max LTV (typical) | Up to 75% | Up to 70% |
| Equity left in property | At least 25% | At least 30% |
| Coverage floor | 1.00 | 1.00 |
| Credit score | 640+ | 640+ |
| Hosting history | About 12 months | About 12 months |
| Income evidence | Appraisal rent data, market data, other STRs | Actual platform and bank history |
| Seasoning | None (you are buying) | Commonly about 6 months |
| Reserves | Often around 6 months of PITIA | Often around 6 months of PITIA |
| Vesting | Individual or LLC, per program | Individual or LLC, per program |
| Property types | Standard residential only | Standard residential only |
Two notes on that table. Reserves vary by lender, leverage, loan size, and transaction type, so treat 6 months as a common pattern, not a rule. And seasoning is the waiting period a lender wants between buying a property and refinancing it.
The 1.00 coverage floor is where select programs start. A separate path through select lenders in the network goes below 1.00, with leverage and terms adjusted. Stronger ratios generally open better leverage and pricing.
Why the Two Numbers Differ
A purchase starts from the price and the appraised value. The lender takes a percentage of the lower of the two, and you cover the rest.
A cash-out starts from the appraised value and what you already owe. The new loan has to pay off the old one first. What is left over is your proceeds.
Short-term-rental collateral is handled more conservatively than a long-term rental. A standard rental cash-out tops out around 75% LTV across most of the network. Short-term-rental cash-out tops out at 70%. The lender is working from less certain income and a property whose rent swings with the season, so it leaves a bigger cushion on the refinance. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
LTV, or loan-to-value, is the loan balance divided by the property’s value. A 75% LTV means the loan is three-quarters of value and you hold the other quarter. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Where Does the Income Evidence Come From?
The income test is the same on both sides: monthly rent divided by PITIA. PITIA is principal, interest, taxes, insurance, and association dues. A ratio of 1.00 means the rent covers the full payment. What changes is the proof behind the rent.
On a purchase, you usually have no operating history under your ownership. Lenders lean on an appraisal rent schedule, third-party market data, or the track record of other short-term rentals you already operate. A BiggerPockets thread on DSCR financing points to a possible disconnect between an appraisal and projected short-term revenue. That matches what brokers see. The projection you believe and the number a lender will use are often not the same.
On a cash-out, you can usually show the real thing: platform statements and bank deposits. This is the biggest documentation edge an existing Airbnb has over a new one.
The appraisal is a separate question. A one-unit property uses Form 1007, the rent schedule. A 2-4 unit property uses Form 1025, the operating income statement. McKissock explains that Form 1007 estimates monthly market rent and that lenders make the final call on income, including short-term income. Class Valuation goes further and argues the form was built for long-term rent and cannot support a short-term appraisal.
The takeaway is practical. Strong bookings help you qualify on coverage. They do not raise the value your LTV is applied to.
When a Purchase Is the Better Fit
A purchase is the better fit when you do not own the property yet, or when you have cash and want a new asset. It is also the cleaner route when the leverage ceiling is higher, and on short-term-rental collateral it is: up to 75% LTV on a purchase, against 70% on a cash-out. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Say you are looking at a cabin-style duplex near a ski corridor, and you plan to host it. At 75% LTV you put down 25% of the price, then add closing costs and reserves. That is the number to budget around. Anything under 25% down on short-term collateral generally means a different structure, a different property type, or a different program.
A purchase also fits when:
- You have hosting experience elsewhere. Your other short-term rentals can supply the roughly 12 months of history lenders want.
- You need a fresh basis. There is no seasoning clock and no payoff to cover.
- You want to vest in an LLC from day one. LLC vesting is available subject to program terms.
The cost is plain. A purchase asks for the most cash up front. And a new Airbnb comes with the thinnest income proof, so the file leans on appraisal and market data. Local 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.
When a Cash-Out Is the Better Fit
A cash-out is the better fit when you already own an Airbnb with real equity and a booking history you can document. You are not writing a check. You are converting equity into cash, which fits an investor who wants to fund the next down payment without selling.
Consider an investor who owns a lake-house rental with a full year of platform statements. Cash-out on short-term collateral stops at 70% LTV, so 30% of the value stays in the property. If the old loan plus costs already eats most of that room, little or no cash comes out. The cap is a ceiling, not a payout. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Two tests apply, and the lower result wins:
1. The LTV cap. The new loan cannot exceed 70% of appraised value on short-term collateral.
2. The coverage floor. A bigger loan means a bigger payment, which pulls coverage down toward the 1.00 line.
Many borrowers hit the coverage test first. A larger loan on a property with ordinary bookings can stop being supportable before the equity cap even matters. A larger down payment lowers the payment and can lift coverage, but it does not erase leverage caps, credit floors, or reserve rules. The strongest files clear both tests: enough equity and enough rental coverage.
Cash-out also has a purpose angle. 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. Under the CFPB’s Regulation Z, the creditor decides the primary purpose case by case. Doss Law comments that a rental cash-out used to pay personal taxes is an example that can be treated as consumer-purpose. So how you plan to use the proceeds matters on a cash-out, and it rarely comes up on a purchase.
Chaining the Two: Cash-Out to Fund a Purchase
Many investors use one file to feed the other. You cash out of Airbnb A, then use the proceeds as the down payment on Airbnb B. These are two separate loan files, each with its own approval.
The cash released has to cover more than the down payment on B. It also has to cover closing costs, reserves, and furnishing and setup. Short-term rentals need beds, linens, and kitchenware before the first guest checks in, and none of that is part of the loan.
Lendmire’s piece Rental HELOC vs DSCR Cash-Out for Raising the Next Down Payment compares the equity-line route. Investment-property HELOC lines cap at $500,000 total, so size matters there. Any cash that goes to you beyond the payoff and costs makes the file a cash-out.
Delayed financing is a related edge case. A cash buyer can sometimes refinance without waiting out the full seasoning period. Treat it as lender-specific and ask before you count on it.
Clearing 1.00 Is Not Positive Cash Flow
The coverage ratio compares rent to PITIA and nothing else. Repairs, vacancy, cleaning, management, utilities, and capital expenses all sit outside the calculation. A short-term rental can clear 1.00 and still lose money after a slow month and a broken water heater.
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.
Which Route Fits You?
Use this as a quick filter.
| Your situation | Likely route |
|---|---|
| No property yet, cash available | Purchase |
| Own an Airbnb with 12+ months of history and equity | Cash-out |
| Need cash for a down payment elsewhere | Cash-out, then a second file |
| Thin hosting history, new conversion | More cash down, or a long-term-rent read |
| Equity is modest, balance is small | HELOC may fit better |
Property type is a gate before any of this. Manufactured homes (single- and double-wide), log homes, and barndominiums are not offered in these programs, on either a purchase or a cash-out.
The broader mechanics are in Lendmire’s complete DSCR loans guide.
Key Terms Defined
LTV (loan-to-value): The loan amount divided by the property’s value, shown as a percentage.
Seasoning: The waiting period a lender wants between acquiring a property and refinancing it.
Reserves: Cash you keep on hand after closing, usually counted in months of PITIA.
PITIA: Principal, interest, taxes, insurance, and association dues. It is the full monthly obligation used in the coverage test.
Cash-out refinance: A new loan that pays off the old one and returns the leftover equity to you as cash.
DSCR (debt service coverage ratio): Monthly rent divided by PITIA. It measures whether the property’s rent covers its own payment.
Balanced Verdict
The minimum does differ. On short-term-rental collateral, a purchase asks for at least 25% down, and a cash-out leaves at least 30% equity in the property. That 5-point gap is the lender’s extra cushion on the refinance. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Neither option is simply better. A purchase wins on leverage and on a clean start, and it costs the most cash. A cash-out wins on documentation and on keeping you from writing a check, and it gives you less room and a second test to pass. Plan around both numbers, and plan around the coverage ratio too. The tighter of the two sets your real ceiling.
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 that arranges these loans through select lenders in its wholesale network across 41 markets, including Washington, D.C.
Frequently Asked Questions
Can I buy an Airbnb with no money down?
Not on a standard short-term-rental purchase. The 75% LTV ceiling means roughly 25% of the price comes from you, plus closing costs and reserves. Some investors reduce out-of-pocket cash by pulling equity from another property first, which is a separate cash-out file. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Can cash-out proceeds from one rental be my down payment on another?
Yes, if the proceeds are enough and the use fits the loan’s business purpose. The second purchase is its own file with its own LTV, coverage, credit, and reserve checks. Budget for closing costs, reserves, and furnishing, not just the down payment.
Will a strong booking history raise my appraisal?
No. Bookings help the coverage test, but the appraisal values the real estate. Income and furnishings do not lift the value your LTV applies to.
Does a bigger down payment fix weak coverage?
It helps, because a smaller loan means a smaller payment and a higher ratio. It does not override credit floors, reserve rules, leverage caps, or property eligibility. A file needs enough equity and enough rental coverage at the same time.
Is the cash-out limit the same as the purchase limit?
No. On short-term-rental collateral, purchase goes up to 75% LTV and cash-out up to 70%. On standard long-term rentals, cash-out tops out around 75% across most of the network. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Investors focused on short-term rentals can review DSCR loans for Airbnb and short-term rentals.
Investors weighing their equity options can start with Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
Lendmire is a DSCR-focused mortgage brokerage, NMLS# 2371349, placing investor loans across 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed by the lender around a property’s rental income rather than personal income documentation, which fits LLC-held rentals, self-employed investors, and portfolios scaling past conventional financed-property limits. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. BiggerPockets forum thread on DSCR loans
2. McKissock, Form 1007 and Short-Term Rental Appraisals
3. Class Valuation, Form 1007 and Short-Term Rentals
4. CFPB Regulation Z, Scope of Coverage
5. Doss Law, Business Purpose Exemption
This article is part of Lendmire’s investment property cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: DSCR Cash-Out Documentation When a Lease Expires During Refinance · How to Clear a Solar Lien on Your First Rental Before a DSCR Cash-Out · How to Keep a Standing HELOC on a Rental to Fund the Next Deal
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.