A beach condo or mountain cabin can be a strong rental. To use a DSCR loan, though, it has to be an investment property, not a second home you plan to enjoy yourself.
In short: LendingStreet finances vacation properties bought as rentals through our DSCR programs, with up to 80% LTV on purchases, a 620 minimum credit score and LLC borrowing allowed. DSCR loans are for business-purpose investment property only, so a second home bought for your own use does not qualify. If you will run the property as a short-term rental, our STR DSCR program qualifies on projected revenue, with rates from 6.49% for well-qualified borrowers. Resort condos, condo-hotels and HOA rental rules can add extra review, so check them before you make an offer.
Lenders sort a vacation-area property by how you will use it. A second home is a property you use yourself for part of the year, even if you rent it out at other times. That is a consumer mortgage, and LendingStreet does not offer it.
An investment property is one you buy to earn rent, with tenants or guests using it. That is what a DSCR loan is for. At closing you will typically sign a statement confirming the loan is for business purposes and that you will not occupy the property. If your plan includes regular family stays, talk to a consumer mortgage lender instead.
| Item | Second home | Vacation rental (investment) |
|---|---|---|
| Main use | Your own personal use | Renting to guests or tenants |
| Loan type | Consumer mortgage | Business-purpose DSCR loan |
| Qualifies on | Your personal income | The property's rent or projected STR revenue |
| LLC borrower | Usually not | Allowed |
| Offered by LendingStreet | No | Yes |
Many vacation properties earn more as nightly rentals than on a 12-month lease. Our STR DSCR program qualifies on projected short-term rental revenue, often from a market data report, an appraiser's analysis or the property's booking history if it is already operating.
How that revenue is counted varies by program. Some use the gross projection, while others apply an expense factor or count only a percentage of it to allow for cleaning, platform fees and slow seasons. Seasonal markets can swing a lot from month to month, so expect the lender to look at the annual figure divided by 12. Our STR page covers the program in detail.
This example is illustrative and not a quote. An investor buys a mountain-town cabin for $450,000 with 25% down. The loan is $337,500 at a sample rate of 7.0% on 30-year amortization, so principal and interest is about $2,245. Taxes are $450 a month and insurance is $250, for a payment of about $2,945.
A long-term lease would bring $2,600 a month, which puts DSCR at about 0.88x. The STR projection is $48,000 a year, or $4,000 a month. Using the full projection, DSCR is about 1.36x. If the program counts 80% of projected revenue, qualifying income is $3,200 and DSCR is about 1.09x, still above the 1.0x standard minimum.
The same cabin can fail or pass depending on how it will be rented, which is why the rental plan needs to be clear from the start.
Vacation markets are full of condos, and some come with features that complicate a loan. A building with a front desk, a mandatory rental pool, daily housekeeping or units too small to live in full time may be treated as a condo-hotel, or condotel. Many standard programs will not finance those.
Other resort condos are non-warrantable for different reasons, such as one owner holding many units or a high share of short-term rentals. Some programs are built for these properties, often at lower leverage. Our condotel and non-warrantable condo page explains what lenders look for, and a condo questionnaire is common.
Short-term rentals are tightly regulated in many vacation areas. A property can look perfect and still be unusable as an STR. Check each layer before you are under contract:
Vacation properties often carry higher costs than a typical rental. Insurance can cost more in coastal and wildfire areas, and flood insurance may be required. HOA dues at resort condos can be high.
Each of these goes into the payment used for DSCR, so get real quotes early. Furnishing, cleaning and management costs do not usually enter the ratio, but they shape your actual cash flow.
Along with entity documents and bank statements for reserves, gather the items that support the rental plan. Our financing team can review the property and come back with 2–3 options if it qualifies, including STR and long-term versions where both make sense.
No. DSCR loans are for investment property only. A second home that you use yourself is a consumer mortgage, which LendingStreet does not offer.
A DSCR loan requires the property to be held as an investment, and you will typically sign a business-purpose and occupancy statement. If you plan regular personal use, a consumer second-home mortgage is the better fit.
Yes. Our STR DSCR program qualifies on projected short-term rental revenue or booking history, with rates from 6.49% for well-qualified borrowers. How the revenue is counted varies by program.
Some programs finance condotels and other non-warrantable condos, often at lower leverage. Features like a front desk or mandatory rental pool trigger extra review.
Then the property would need to qualify on long-term rent instead. Read the HOA rules before you make an offer, since a ban can change the whole deal.
Yes. LLC borrowers are allowed, and the loan qualifies on the property's rent or projected revenue rather than your personal income.
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