Madison's most expensive homes sit on the shores of Lake Mendota and Lake Monona and in villages such as Shorewood Hills and Maple Bluff. At those prices, Wisconsin's property tax bill becomes one of the largest lines in the payment.
In short: LendingStreet offers jumbo DSCR loans from about $1.5M to $5M+ for purchase, rate-and-term and cash-out on high-value 1-8 unit rentals in Madison and across Dane County, qualified on the property's rent with no W-2s or tax returns. Larger balances get more review, and maximum LTV can be lower and varies by program. In Madison, jumbo balances usually mean a lakefront or executive home, a campus-area building of up to eight units, or several rentals combined.
High-value single-family rentals are concentrated along Lake Mendota in Shorewood Hills, Maple Bluff and parts of Middleton, along Lake Monona and in older neighborhoods such as University Heights, Nakoma and the Highlands. These homes often lease to executives, physicians and visiting faculty.
On the income side, eight-unit buildings near campus and on the isthmus can reach jumbo balances, and they tend to carry a large loan more comfortably because several leases support the payment.
Wisconsin property taxes are high, and on a $2 million home the monthly tax bill alone can rival what many Madison rentals earn in rent. Because taxes are part of the DSCR payment, they leave less room for principal and interest. Shorewood Hills and Maple Bluff are separate villages with their own assessors and rates, so check the exact bill rather than using a city-wide estimate.
Investors do not receive the lottery and gaming credit, which applies only to an owner's primary residence.
This example is illustrative and not a quote. An investor buys a Lake Mendota home for $1,950,000 and leases it to an executive family for $10,500 a month. Taxes are $3,200 a month and insurance is $520.
At 75% LTV the loan is $1,462,500, the payment is about $13,946 and DSCR is about 0.75x, well below the 1.0x standard minimum. At 65% the DSCR is about 0.83x. Taxes alone are about 23% of the payment at 75% LTV. Lake homes in Madison usually need much lower leverage, a sub-1.0 DSCR program, or a different property type.
| Item | 75% LTV | 65% LTV | 55% LTV |
|---|---|---|---|
| Loan amount | $1,462,500 | $1,267,500 | $1,072,500 |
| Estimated principal and interest | $10,226 | $8,863 | $7,499 |
| Taxes and insurance | $3,720 | $3,720 | $3,720 |
| Total monthly payment | $13,946 | $12,583 | $11,219 |
| DSCR at $10,500 rent | About 0.75x | About 0.83x | About 0.94x |
Compare an eight-unit building near campus priced at $2,300,000, with each apartment leasing for $2,050, or $16,400 a month. At 70% LTV the loan is $1,610,000, and with taxes of $3,700 and insurance of $700, the payment is about $15,657 for a DSCR of about 1.05x. Several leases carry a jumbo payment more easily than one.
That building comes with its own work: August turnover, owner-paid utilities in many older buildings and Wisconsin's commercial building code for alterations on buildings with three or more units.
Lakefront homes can sit in mapped flood zones, and Madison saw significant flooding in 2018 along the lakes and in low-lying areas. Get a flood determination and insurance quote early, and ask about piers, boathouses and shoreline structures, which can affect coverage and permits.
Large older homes in University Heights, Nakoma and the lake villages can also carry slate or tile roofs, older boilers and custom finishes that raise replacement cost. Ask your agent to price the policy on a realistic rebuild figure, and include the premium in your ratio from the start.
Madison generally allows short-term rentals only in a host's primary residence, so a non-owner-occupied lake home in the city cannot be financed as a nightly rental. Investors looking for high-end short-term rentals in Wisconsin often consider Door County, Lake Geneva or the Wisconsin Dells area, where local rules may allow them; see our Wisconsin short-term rental page.
Jumbo DSCR loans still qualify on rent with a 620 minimum credit score and 30-year terms available. Expect more review of reserves, possibly a second valuation, and lower maximum LTV than on smaller loans. Pricing on large balances is set case by case.
Comparable leases for lake homes are scarce, so bring any lease history you have. For apartment buildings, two years of operating statements and a current rent roll carry the most weight.
Appraisals of high-end Madison homes can be tricky too. Lakefront sales are infrequent, frontage and lot quality vary a lot, and the appraiser may need to reach back in time or across the lake for comparisons. Leave room in your plan for a value that comes in below the contract price.
If you own five or more Madison rentals, a blanket portfolio loan can combine them under one loan qualified on combined cash flow, with release provisions when you sell one. That often reaches a large balance more easily than a single lake home.
A group of east side two-flats and suburban rentals also spreads risk across many tenants. One executive lease carries all of a lake home's income, while a portfolio keeps producing rent if one unit is empty after the August turnover.
Send the address, price or value, the lease or rent roll, the tax bill and your target leverage. We will run the ratio at several loan amounts and tell you which approach fits. See also our Wisconsin jumbo DSCR page. If you own several Madison rentals already, list them too, since a portfolio loan may be the better route to a large balance.
Yes, from about $1.5M to $5M+ on high-value 1-8 unit rentals in Madison, Shorewood Hills, Maple Bluff, Middleton and across Dane County.
Mostly because of property taxes. On a high-value Wisconsin home, taxes take a large share of the payment, leaving less room for principal and interest. Lower leverage or a sub-1.0 DSCR program are the usual answers.
Often, yes. Several leases support a large payment better than one, which is why campus-area buildings are common jumbo files.
Often. Larger balances get more review, and maximum LTV varies by program. Reserve requirements are usually higher too.
Madison generally allows short-term rentals only in a host's primary residence, so a non-owner-occupied lake home usually cannot be used that way.
They affect insurance, which is part of the payment. Get a flood determination early on any lakefront or low-lying property, and ask whether flood coverage is required. On a large home, the flood premium alone can move the ratio.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
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