Burlington's housing shortage has made short-term rentals a political issue, and the city has moved to keep whole homes in the long-term rental market. For investors, the nightly-rental opportunity in northern Vermont is real, but most of it sits in ski towns and lake communities rather than in the city.
In short: LendingStreet finances short-term rentals for Burlington-area investors with DSCR loans that can qualify on projected nightly revenue on some programs, with no W-2s or tax returns and LLC borrowers allowed. Burlington regulates STRs through its zoning and permit rules and has tightened rules on whole-unit rentals that are not the owner's home, so treat an investor STR in the city as unlikely to be permitted until the city confirms otherwise. Stowe, the Mad River Valley, Smugglers' Notch and the Lake Champlain islands are more common STR markets for our borrowers.
Burlington has one of the tightest rental markets in New England, and city leaders have treated short-term rentals as housing taken out of the long-term supply. The city regulates STRs through zoning and permitting and has adopted rules aimed at limiting whole-unit STRs in properties where the owner does not live. Details have changed over time, so check the current ordinance with the city's Department of Permitting and Inspections before you buy.
Our investor loans are business-purpose loans on non-owner-occupied property, and we underwrite only income the property can legally earn. For most Burlington investment properties, that means long-term leases to students, hospital staff and young professionals. Winooski, South Burlington and other nearby communities have their own rules, so check each one separately.
Vermont's vacation demand follows the mountains and the lake. Town rules vary, and many condo associations at ski resorts set their own rental policies, so read the declaration and bylaws before you sign.
| Market | Peak seasons | What to check |
|---|---|---|
| Burlington city | Limited for investor units | City zoning and permit rules |
| Stowe | Ski season, foliage, summer | Town rules, condo bylaws, winter access |
| Mad River Valley | Ski season, summer | Town rules, wells and septic, road access |
| Champlain islands | Summer | Seasonal demand, shoreline and septic issues |
Vermont's meals and rooms tax applies to short-term rentals, and the state has added a surcharge on short-term rental stays in recent years. Operators register with the Vermont Department of Taxes, and booking platforms collect tax on many stays. Some towns, including Stowe, add a local option tax. Vermont also has health and safety registration requirements for short-term rental operators. Ask a Vermont tax professional how they apply to your listing.
Vermont splits the education property tax between homestead property, which is the owner's primary residence, and non-homestead property, which includes second homes, rentals and STRs. Non-homestead rates are often higher, and the education tax makes up a large part of most Vermont tax bills. If you buy from someone who lived in the home, the bill you pay may differ from theirs. Use the town's non-homestead figure in your DSCR math.
This example is illustrative and not a quote. An investor buys a two-bedroom condo near the Stowe Mountain Road for $650,000. A third-party projection estimates $72,000 a year in gross nightly revenue, about $6,000 a month on average. Taxes at the non-homestead rate are budgeted at $500 a month, HOA dues at $600 and the investor's insurance at $150.
At 75% LTV the loan is $487,500. Estimated principal and interest on a 30-year term is about $3,359, the total payment is about $4,609 and DSCR on the full projection is about 1.30x. If a program discounted the projection by 20%, income would be about $4,800 and DSCR about 1.04x, close to the 1.0x standard minimum.
| Item | Full projection | Projection less 20% |
|---|---|---|
| Purchase price | $650,000 | $650,000 |
| Loan at 75% LTV | $487,500 | $487,500 |
| Monthly revenue used | $6,000 | $4,800 |
| Estimated principal and interest | $3,359 | $3,359 |
| Taxes, HOA and insurance | $1,250 | $1,250 |
| Total monthly payment | $4,609 | $4,609 |
| DSCR | About 1.30x | About 1.04x |
Vermont ski towns earn in two or three seasons: winter from December into March, fall foliage from mid-September through October, and summer. April and early May, Vermont's mud season, and November are slow. Lenders that use projected revenue look at annual income spread across 12 months, so keep reserves for those months.
Winter operating costs are high: heat, plowing, roof snow removal and frozen-pipe risk. They are not in the DSCR calculation, but they come out of your cash flow. Lake properties on the islands run on a summer calendar instead, with most revenue between late June and Labor Day.
Many Vermont vacation homes sit on private or seasonal roads, rely on wells and septic systems and are some distance from comparable sales. Lenders want year-round legal access and a septic system that supports the bedroom count being rented. Vermont's state wastewater permit rules can limit the number of bedrooms a system is approved for, so check the permit before you advertise a larger home. Comparable sales for rural homes can be miles apart, which can slow the appraisal.
On some programs, a third-party projection can qualify an STR instead of a lease, and some programs discount it. If you already run the property, 12 months of platform statements make the strongest refinance case; cash-out goes up to 75% LTV, with seasoning that varies by program.
DSCR loans start at $150,000 with no stated maximum, purchases go up to 80% LTV, often lower on STRs, and the minimum credit score is 620. Send the address, town and HOA rules, any booking history and a projection through the form below, or call (877) 298-1001.
Burlington restricts whole-unit STRs in homes that are not the owner's residence, so investor STRs in the city are unlikely to be permitted. Confirm with the city.
Stowe, the Mad River Valley, Smugglers' Notch and the Lake Champlain islands are common choices. Each town and HOA has its own rules.
Vermont's meals and rooms tax applies, plus a short-term rental surcharge and any local option tax. Register with the Vermont Department of Taxes.
Rentals and STRs are non-homestead property in Vermont, and non-homestead education tax rates often differ from homestead rates.
On some programs, yes, using a third-party projection based on nearby comparable listings.
Yes. A Vermont wastewater permit can limit the bedroom count, which affects how many guests you can host.
Yes. LLC borrowers are standard.
DSCR loans start at $150,000 with no stated maximum.
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