Austin's $1M+ rentals range from Tarrytown and Travis Heights homes to Lake Travis houses and Hill Country vacation rentals near Wimberley and Fredericksburg. On every one of them, Texas property taxes are a big line in the DSCR math.
In short: LendingStreet finances $1M+ rentals in Austin and the Texas Hill Country with DSCR loans that qualify on the property's rent or, for short-term rentals, projected revenue. Loans start at $150,000 with no stated maximum, rates start at 6.125% for well-qualified borrowers, and STR DSCR starts at 6.49%. Purchases go up to 80% LTV and cash-out up to 75%, though large balances often get less leverage and need more reserves. Texas has no state income tax but relatively high property taxes, and investment properties do not get the homestead exemption, so the tax line often decides whether a large Austin loan clears 1.0x.
Many large Austin-area deals are bought with short-term rental income in mind, especially on Lake Travis and in the Hill Country. A DSCR loan can qualify on projected STR revenue, but only if the property can legally operate as one and the projection is supported.
The same house might clear the ratio easily on STR revenue and fall well short on a long-term lease. That gap is the risk you are taking on, and lenders know it. Programs differ on how they treat projected revenue, and some apply an expense factor or use a more conservative estimate.
Compare both versions of the deal before you buy. If the long-term number is far below the payment, think about what happens if the STR rules change or bookings slow.
| Item | Long-term rental | Short-term rental |
|---|---|---|
| Income used | Lease or appraiser's market rent | Projected revenue, if supported |
| Rates from | 6.125% | 6.49% |
| Key approval question | Rent vs. full payment | Legal to operate, and projection support |
| Typical Austin-area fit | In-city homes, duplexes, suburbs | Lake Travis, Hill Country, some licensed city homes |
| Ongoing risk | Vacancy, rent levels | Rule changes, seasonality, competition |
Texas does not tax wages at the state level, so local governments rely heavily on property taxes. On a seven-figure rental, that is often the second-largest line in the payment after principal and interest.
Owner-occupants get a homestead exemption and limits on how fast their taxable value can rise. Investment properties do not. If the seller lived in the home, their tax bill may be much lower than yours will be, so build your numbers from the purchase price and the local tax rates, not the seller's bill.
Appraisal districts reassess values every year, and many owners protest their values. Your DSCR is calculated on the taxes you will actually pay, so get a realistic estimate from the Travis County Appraisal District or the relevant county, and your title company.
Inside the city, investors look at Tarrytown, Zilker, Barton Hills, Bouldin Creek, Travis Heights, Hyde Park, Mueller and East Austin. Austin's 2023 HOME code changes allow more units on many single-family lots, so duplexes and homes with a second unit are becoming more common.
West of the city, West Lake Hills, Rollingwood, Lakeway, Bee Cave and the Lake Travis shoreline have larger, higher-priced homes. Farther out, Dripping Springs, Wimberley, Fredericksburg, Spicewood and the Canyon Lake and New Braunfels area draw vacation-rental buyers.
These are general patterns, not price claims. Rents and values vary a lot street by street, so use current comps.
The City of Austin licenses short-term rentals and has revised its rules several times, including changes to which property types and zones can be licensed. Other cities and counties in the region set their own requirements, and many HOAs in Lakeway, Bee Cave and other planned communities restrict or ban nightly rentals.
Fredericksburg and other Hill Country towns regulate vacation rentals through permits and zoning, and some limit them in certain districts. Hotel occupancy taxes apply to short-term stays in Texas.
Before you rely on STR revenue, confirm the city or county rules, any HOA restrictions and the permit status. If you cannot confirm it, underwrite the property on long-term rent.
Not every large Austin deal is a vacation rental. Central neighborhoods have steady long-term demand from tech, health care, state government and University of Texas employees and students, and a duplex or a house with a second unit can spread a seven-figure payment across two leases.
With more units now allowed on many lots, some investors buy new construction with two or three units, or an older home with room to add one. For a DSCR loan, only finished, permitted units with supportable rent count. A unit that is still being built is a construction or bridge question first, with a DSCR refinance after it is leased.
Austin's rental market has seen a lot of new supply in recent years, so rents can vary more than investors expect between similar homes. Recent signed leases nearby are the strongest support for the appraiser's rent estimate.
This example is illustrative and not a quote. An investor buys a lake-area home for $1,400,000 that can legally operate as a short-term rental. Supported projected revenue averages $10,500 a month over a year. Taxes are budgeted at $2,300 a month and insurance at $400.
At 75% LTV the loan is $1,050,000 and the down payment is $350,000. At a sample rate of 7.375% on a 30-year fixed, principal and interest is about $7,252. The total payment is about $9,952, and DSCR on projected STR revenue is $10,500 divided by $9,952, or about 1.06x.
If the same home could only be rented long-term at $6,800 a month, DSCR would be about 0.68x. That gap shows how much of this deal depends on STR income staying legal and strong.
| Item | STR revenue | Long-term rent |
|---|---|---|
| Loan amount (75% LTV) | $1,050,000 | $1,050,000 |
| Principal and interest | $7,252 | $7,252 |
| Taxes and insurance | $2,700 | $2,700 |
| Total monthly payment | $9,952 | $9,952 |
| Monthly income used | $10,500 | $6,800 |
| DSCR | About 1.06x | About 0.68x |
Central Texas is known as Flash Flood Alley, and properties near rivers, creeks and lakes can sit in mapped flood zones. If the property is in a FEMA special flood hazard area, flood insurance is generally required, and it adds to the payment.
Rural Hill Country homes may rely on wells and septic systems, and some sit on larger acreage. Lenders focus on the house and a reasonable amount of land, so very large or agricultural parcels can be harder to finance on a residential DSCR loan. Ask early if the property has acreage, outbuildings or a separate guest house.
Our DSCR basics hold at any size: qualify on the property, no W-2s or tax returns, a 620 minimum credit score, LLC borrowers allowed and 30-year fixed options. On larger loans, maximum LTV is often lower and reserve requirements are often higher.
Some programs require a second appraisal or a more detailed review on large balances. Lake and Hill Country homes can take longer to appraise because comparable sales are spread out. Pricing on large loans is set case by case, and experience operating rentals, especially STRs, can help.
A large share of Austin investor loans fall between $500K and $1M rather than above it. Common examples are duplexes and homes with a second unit in East Austin, Mueller, Crestview and Allandale, newer single-family homes in Round Rock, Cedar Park, Leander, Pflugerville and Georgetown, and smaller Hill Country cabins and vacation homes around Wimberley, Dripping Springs and the Highland Lakes.
Qualifying works the same way: rent divided by principal, interest, taxes, insurance and any HOA dues, with 1.0x as the standard minimum. Below $1M, leverage is often closer to the program maximums of 80% LTV on purchases and 75% on cash-out, and reserve requirements are often lighter, though both vary by program.
Property taxes still decide many of these files. A suburban home in a municipal utility district can carry a tax bill that moves the ratio more than a small change in rate, so price the full combined tax rate before you make an offer.
A complete file helps the financing team give you a clear answer quickly.
LendingStreet is an investment property financing company. We finance business-purpose loans on non-owner-occupied rentals in Austin, the Hill Country and across Texas.
Send the address, price, rent type and target leverage. The financing team will run the ratio on both long-term and STR income where it applies, and come back with 2-3 options.
Yes, if the property can legally operate as a short-term rental under local and HOA rules. STR DSCR loans qualify on projected revenue, with rates from 6.49% for qualified borrowers.
Investment properties do not get the homestead exemption or its limits on value increases. If the seller lived in the home, your bill will likely be higher. Use an estimate based on your purchase price.
Texas's well-known home equity loan restrictions apply to homesteads. Cash-out on a non-owner-occupied rental follows our program rules: up to 75% LTV, often lower on large balances.
Texas law generally prevents cities from adopting rent control. Local rules on short-term rentals, licensing and zoning still apply, so check them for your property.
Often, if it is primarily residential and the land is a reasonable size for the home. Large or agricultural parcels can be harder to finance on a residential DSCR loan, so share the details early.
Possibly, if the guest house is permitted, has its own living facilities and the appraiser can support its rent. Share the details early so the financing team can tell you how it is likely to be treated.
Our DSCR programs have no stated maximum. Loans start at $150,000, and larger balances are reviewed and priced case by case.
If the property is in a FEMA special flood hazard area, flood insurance is generally required. Check the map and get a quote before you commit.
No. LendingStreet finances non-owner-occupied investment property only, so second homes used personally do not qualify.
Yes. DSCR loans start at $150,000 with no stated maximum, and $500K to $1M loans are common for East Austin duplexes, suburban single-family homes in Round Rock, Cedar Park and Georgetown, and smaller Hill Country vacation homes.
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