Houston has no zoning code, so investors often assume anything goes for nightly rentals. It does not. The city now registers short-term rentals, deed restrictions cover many neighborhoods, and the insurance quote can change the math more than the nightly rate does.
In short: LendingStreet finances Houston-area short-term rentals with DSCR loans that can qualify on projected nightly revenue on some programs instead of a 12-month lease. Loans start at $150,000 with no stated maximum, purchases go up to 80% LTV, the standard minimum DSCR is 1.0x and the minimum credit score is 620. Before you buy, confirm the property can be registered with the City of Houston (or the city it sits in) and that deed restrictions or an HOA do not bar stays under 30 days.
In 2025 Houston City Council adopted a short-term rental ordinance that requires operators to register each rental with the city and meet safety and conduct requirements. Fees, effective dates and enforcement details can change, so confirm the current requirements with the city before you close.
The bigger trap is private. Much of Houston is governed by deed restrictions instead of zoning, and many subdivisions, from older inner-loop neighborhoods to newer master-planned communities, limit rentals or business use. The city can enforce some deed restrictions. Read the recorded restrictions and any HOA rules on the exact lot, not a summary from the listing agent.
Outside the city limits the rules depend on the jurisdiction: Pasadena, Pearland, Sugar Land, League City and the unincorporated parts of Harris, Fort Bend and Montgomery counties each handle rentals differently.
Stays under 30 days in Texas are generally subject to state hotel occupancy tax, and the City of Houston and Harris County levy their own hotel taxes on top. Some booking platforms collect part of this for you and some do not, so confirm which taxes the platform remits and which you must file yourself.
Lenders and appraisers increasingly ask whether a rental is registered. Keep your city registration, your hotel tax account and your insurance declarations page in one folder; it shortens underwriting on a purchase and on a later refinance.
Demand around Houston comes from a few clear sources. Properties close to one of them usually book better than a nice house in a quiet suburb.
| Area | Main guest | What to check |
|---|---|---|
| EaDo, East End, Midtown | Stadium, concert and convention visitors | City registration; townhome HOA rules |
| Texas Medical Center, Museum District, Third Ward | Patient families, traveling clinicians | Many stays run 30+ days; lease terms |
| Heights, Montrose, Rice Military | Weekend and event visitors | Deed restrictions vary block by block |
| Clear Lake, Kemah, Seabrook | NASA visitors, boaters, Kemah Boardwalk | Windstorm coverage; flood zone |
| Galveston, Crystal Beach, Surfside | Beach vacationers | Separate local registration and taxes |
| Lake Conroe, Lake Livingston | Lake weekends, families | County rules; HOA covenants |
Houston's calendar is lumpy. The Houston Livestock Show and Rodeo in late February and March, big conventions at George R. Brown, playoff runs and stadium concerts create short spikes in the urban core. Medical Center demand is steadier and often runs longer than a few nights.
Galveston and the lake markets peak in summer and spring break, then slow after Labor Day. Hurricane season runs June through November, and a storm or long power outage can wipe out bookings for weeks. A projection that shows flat revenue every month is not realistic here; ask for month-by-month figures.
This example is illustrative and not a quote. An investor buys a three-bedroom EaDo townhome for $385,000. A third-party projection estimates $52,000 a year in nightly revenue, about $4,333 a month, driven by stadium and convention weekends.
At 75% LTV the loan is $288,750. Estimated principal and interest is about $2,009. Taxes are budgeted at $738 a month at a full investor rate with no homestead exemption, short-term rental insurance with wind coverage at $245 and HOA dues at $95, for a total of about $3,087.
On the full projection, DSCR is about 1.40x. If revenue came in 20% lower, at about $3,467 a month, DSCR would still be about 1.12x, above the 1.0x standard minimum.
| Item | Full projection | Projection less 20% |
|---|---|---|
| Monthly revenue used | $4,333 | $3,467 |
| Estimated principal and interest | $2,009 | $2,009 |
| Taxes, insurance and HOA | $1,078 | $1,078 |
| Total monthly payment | $3,087 | $3,087 |
| DSCR | About 1.40x | About 1.12x |
Many standard homeowner policies exclude rentals under 30 days, so you need a policy written for short-term rental use. Near the coast, properties in designated catastrophe areas, including Galveston County and parts of eastern Harris County, often need separate windstorm coverage, frequently through the Texas Windstorm Insurance Association.
Flooding is the other Houston question. Large parts of the metro flooded during Hurricane Harvey in 2017, and some homes outside mapped flood zones took water. Check the FEMA flood map, ask the seller for flood history and get a flood quote even when it is not required.
On some programs, DSCR is calculated on a projection of short-term rental revenue rather than a signed lease. Comparable properties matter: a Galveston beach house should be compared with nearby beach houses, and an EaDo townhome with other downtown-adjacent rentals of the same size. If the third-party number looks low for your property, our guide to low AirDNA projections explains the options.
If a property cannot legally run as a nightly rental, the loan is underwritten on a long-term lease instead. Many Houston investors buy with that fallback in mind, choosing homes near the Medical Center or downtown that would also lease well to a 12-month tenant.
Owners who already operate a Houston rental can also refinance on their own booking history on some programs, which can be stronger evidence than a projection. See our STR DSCR refinance page.
Send the address, purchase price, the revenue projection or your booking history, and the deed restriction or HOA documents. The financing team will check the ratio on the projection and on a lower-revenue case and come back with options, including sub-1.0 DSCR programs where they fit. Call (877) 298-1001 or use the form below.
Yes, but the city adopted a registration ordinance in 2025, and deed restrictions or HOA rules can still prohibit them on a given lot. Confirm both before you buy.
No. Deed restrictions act like private zoning in many neighborhoods, and the City of Houston can help enforce some of them.
State hotel occupancy tax plus city and county hotel taxes generally apply to stays under 30 days. Confirm what your booking platform collects and what you must remit.
Yes, if it meets Galveston's own registration and tax rules and qualifies on revenue. Budget for windstorm and flood insurance, which can be large on the island.
On some programs, yes. DSCR can be calculated on projected short-term rental revenue, often from a third-party projection, instead of a 12-month lease.
That is common. Stays of 30 days or more are generally handled as leases rather than hotel stays, and they can smooth slow months.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
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