A ski-in chalet, a lake house with a dock or a beach home that sleeps sixteen can earn more than a long-term rental ever could. Financing one means proving that income before the first guest checks in.
In short: LendingStreet finances $1M+ vacation rentals as investment property through our short-term rental DSCR programs, with rates from 6.49% and qualification on the property's projected short-term rental revenue rather than your personal income. LLC borrowers are allowed and there are no W-2s or tax returns. On larger balances, maximum leverage is often lower and reserve requirements higher, and some programs may require a second appraisal or a more detailed review. The deal usually comes down to three things: a believable revenue projection, local rules that allow short-term rentals, and an insurance policy that fits the property.
A $350,000 cottage and a $1.8M mountain home are both short-term rentals, but they are not the same file. At the top of a market there are fewer true comparables, revenue swings more with the season, and one weak booking month costs more in dollars.
Lenders respond by looking harder at the revenue estimate, the reserves you hold after closing and whether the property can legally operate as a short-term rental for the life of the loan. None of that is a reason to avoid the deal. It is a reason to prepare the file carefully.
On a purchase, the property usually has no booking history under your ownership. Short-term rental DSCR programs qualify on projected revenue, typically from a third-party data report, an appraiser's short-term rental analysis or both. On a refinance, actual booking history is often used, sometimes alongside a projection.
Programs differ in how they turn gross revenue into qualifying income. Some apply an expense factor or use a portion of projected gross revenue, because a vacation rental has cleaning, management, platform fees and supplies that a long-term rental does not. Ask how your program treats the projection before you rely on it.
If the projection comes in lower than you expected, our page on low STR revenue projections explains common next steps.
Revenue reports work best when the comparable listings truly match the subject property. At the luxury level, small differences matter: a home that sleeps sixteen is not comparable to one that sleeps eight, and a lakefront home with a private dock earns differently than one across the road.
You can help by giving the appraiser and the financing team a clear picture of the property. List the bedroom and bathroom count, maximum occupancy allowed by local rules, and amenities that drive bookings, such as a hot tub, ski access, a pool, water frontage or a view. If the seller has booking records, ask for them, even though a purchase is usually underwritten on a projection.
Be skeptical of your own optimism too. A projection that assumes peak nightly rates all year will not survive underwriting, and it will not survive your first spring.
Each type of luxury vacation market has its own pattern. Underwriters and appraisers tend to focus on the items below.
| Market type | Typical revenue pattern | What gets a closer look |
|---|---|---|
| Mountain and ski | Strong winter peak, often a second summer season | Snow-dependent months, access roads, comparable homes with similar amenities |
| Lake | Concentrated in summer and holiday weekends | Waterfront access, dock condition, length of the off-season |
| Beach and coastal | Summer peak, longer seasons in warmer climates | Windstorm and flood insurance, local rental rules, distance to the water |
| Desert and resort | Cooler-month peak | Summer revenue drop, HOA and resort rules on rentals |
This example is illustrative and not a quote. An investor buys a five-bedroom mountain home for $1,600,000. A third-party projection estimates gross short-term rental revenue of $180,000 a year.
Assume the program uses 80% of projected gross revenue for qualifying, or $144,000 a year, which is $12,000 a month. Assume the program allows 70% LTV at this balance: the loan is $1,120,000. At a sample rate of 7.25% on a 30-year fixed, principal and interest is about $7,640 a month. Add $1,300 for property taxes and $900 for insurance, and the total payment is about $9,840. The DSCR is about $12,000 divided by $9,840, or 1.22x.
The investor brings a $480,000 down payment plus sample closing costs of $38,000, and keeps reserves after closing. The next section shows why those reserves matter even when the annual ratio looks healthy.
A DSCR is calculated on an annual or average monthly basis. Your mortgage payment is due every month. In the example, the home earns most of its revenue in winter and summer, and the spring shoulder season does not cover the payment.
Using the same $180,000 projection split by quarter, the spring quarter brings in $24,000 while three months of payments total about $29,520, a gap of about $5,520 before cleaning, utilities and management. Strong quarters cover it over the year, but only if you hold cash to bridge the slow months.
| Quarter | Sample gross revenue | Sample loan payments (3 months) | Before operating costs |
|---|---|---|---|
| Winter (Jan-Mar) | $66,000 | $29,520 | +$36,480 |
| Spring (Apr-Jun) | $24,000 | $29,520 | -$5,520 |
| Summer (Jul-Sep) | $60,000 | $29,520 | +$30,480 |
| Fall (Oct-Dec) | $30,000 | $29,520 | +$480 |
| Year | $180,000 | $118,080 | +$61,920 |
Many mountain towns, lake communities and beach cities regulate short-term rentals. Rules can include permits or licenses, occupancy limits, minimum stay lengths, caps on the number of permits and outright bans in some zones. HOAs and condo associations can add their own restrictions.
Lenders want to know the property can operate as a short-term rental now. Confirm the rules with the city or county and the HOA before you sign, and keep copies of any permit or license. If rules change after closing, a property that can also rent long-term or mid-term gives you a fallback.
A standard landlord policy may not cover short-term rental activity. You will usually need a policy written for short-term rentals, with liability coverage that reflects guests on the property. Coastal homes may need separate windstorm or flood coverage, and wildfire exposure can affect mountain policies.
Insurance cost goes straight into the DSCR. Get a real quote early, because a high premium can move the ratio more than a small change in rate.
A high-end vacation rental needs furniture, linens, kitchenware, outdoor equipment and often a hot tub, game room or dock gear. A DSCR loan finances the real property, not the furniture, so plan to pay for the setup from your own funds unless it conveys with the purchase.
Budget for professional photos, listing setup and a few weeks of ramp-up before bookings settle. Those costs do not appear in the DSCR, but they affect how much cash you need after closing.
When qualifying income does not cover the payment at the program minimum, the usual levers are a larger down payment, a different rate structure or a program with a lower ratio requirement. The 1.0x standard minimum is not the only option: some programs go below 1.0, and no-ratio programs exist for certain borrowers, usually with lower leverage.
A smaller loan is often the cleanest fix on a luxury purchase. In the example, every $100,000 less borrowed lowers the sample principal and interest by roughly $680 a month, which can move the ratio meaningfully.
Our financing team reviews the scenario and comes back with 2-3 options. A complete file helps on larger balances.
Yes. DSCR loans start at $150,000 with no stated maximum, and larger balances are reviewed case by case. Maximum LTV is often lower and reserves higher on bigger loans.
Short-term rental DSCR rates start at 6.49% for well-qualified borrowers. Rates change with the market, and larger balances are priced case by case.
Yes. Short-term rental programs qualify on projected revenue, usually from a third-party report or appraiser analysis. Some programs apply an expense factor or use a portion of the gross projection.
On a refinance, actual booking history is often used. A strong, documented history can help, especially when it supports or beats the projection.
Some programs may require a second appraisal or a more detailed review on large balances, particularly where comparable sales are limited.
Reserve requirements vary by program and are often higher on larger balances. Beyond the program minimum, plan for the slowest season, since revenue in shoulder months may not cover the payment and operating costs.
Expect questions about permits, zoning and HOA rules. You should confirm them yourself with the local government and HOA before you buy.
No. The DSCR loan finances the real property. Furniture and setup are usually paid from your own funds unless they convey with the purchase.
LendingStreet finances non-owner-occupied investment property only. These loans are for properties operated as rentals, not second homes for personal use.
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