Michigan's vacation rental map follows the Lake Michigan shoreline and the inland lakes up north. Many towns have adopted their own rules, and the state's property tax system can surprise investors.
In short: LendingStreet makes DSCR loans on Michigan short-term rentals, and some programs size the loan on a third-party projection of short-term rental revenue rather than a 12-month lease. Qualification runs on the property, not your personal income: 620 minimum credit, loans from $150,000 with no stated maximum and LLC ownership allowed. Local rules vary town to town, and losing the principal residence exemption raises taxes on most investor purchases.
The west Michigan lakeshore, including South Haven, Saugatuck and Douglas, Holland, Grand Haven and Ludington, draws summer visitors from Chicago and Grand Rapids. Traverse City, Leelanau County and the Sleeping Bear Dunes area are a major summer market, with wineries and cherry festivals.
Petoskey, Harbor Springs and Charlevoix, along with the Mackinac Straits and the Upper Peninsula, attract summer travelers and snowmobilers. Detroit and Ann Arbor see business, medical and sports travel, and Grand Rapids has a steady event calendar. Lakeshore stock ranges from small cottages a few blocks from the beach to large lakefront homes, and the cottages often produce better ratios for their price.
| Market | Who books | What to check |
|---|---|---|
| South Haven and Saugatuck | Chicago weekenders | Town limits or caps |
| Traverse City | Summer visitors, wine country | City rules in residential zones |
| Petoskey and Harbor Springs | Summer families | Town and township rules |
| Upper Peninsula | Snowmobilers, outdoor visitors | Access, well and septic |
Michigan has no statewide short-term rental license, and state lawmakers have debated limits on local regulation. Many towns regulate on their own. Traverse City limits non-owner-occupied rentals in residential zones, Saugatuck and Douglas have adopted caps or limits, and Ann Arbor and Grand Rapids restrict non-owner-occupied short-term rentals in residential areas.
Townships around inland lakes often have their own ordinances, and HOAs can restrict rentals. Confirm local rules for the address before you buy.
Instead of asking for your tax returns, the lender divides the property's income by its full monthly payment, including taxes, insurance and HOA dues. For a vacation rental with no history, some programs accept a third-party revenue projection built from comparable listings. If the property already rents nightly, its booking history can carry more weight.
Most programs look for a ratio of at least 1.0x, and sub-1.0 options exist. Purchase leverage goes up to 80% LTV and cash-out up to 75% LTV, with lower limits on some short-term rental programs and large loans. Loans start at $150,000, the minimum credit score is 620 and 30-year terms are available. Anything from a single condo to an eight-unit building fits the residential program; larger buildings go through commercial lending.
Michigan applies its use tax to short-term lodging, and some areas add local convention and tourism assessments. Platforms collect many of these, but direct bookings require registration with the state.
Michigan's principal residence exemption excuses owner-occupants from most of the school operating millage. Investors do not get it, so the bill on a rental is often much higher than the seller's. Taxable value also uncaps to the state equalized value after a sale, which can push the bill higher still.
Lakefront homes may need flood coverage, and erosion along parts of the Lake Michigan shoreline affects insurance and appraisal. Snow loads and frozen pipes are common winter claims up north.
Some west Michigan towns now cap the number of licenses or require spacing between rentals, so a property with an active license can be worth more than one without. Ask whether the license transfers on sale.
This example is illustrative and not a quote. An investor buys a three-bedroom home near downtown South Haven for $495,000. A projection for comparable homes shows $49,000 a year in gross revenue. At 75% LTV the loan is $371,250, and estimated principal and interest on a 30-year term is about $2,596 a month. Add $720 in taxes, $190 in insurance, and the payment is about $3,506. $4,083 of average monthly revenue divided by that payment gives a DSCR of about 1.16x.
Putting 30% down changes the picture: a $346,500 loan, a payment of about $3,333 and a DSCR of about 1.23x, with $24,750 more due at closing. The tax line reflects the loss of the principal residence exemption and uncapping after the sale. Using the seller's tax bill would overstate the ratio.
| Item | Amount |
|---|---|
| Purchase price | $495,000 |
| Loan amount at 75% LTV | $371,250 |
| Down payment | $123,750 |
| Projected annual revenue | $49,000 |
| Average monthly revenue | $4,083 |
| Estimated principal and interest (30-year) | $2,596 |
| Property taxes | $720 |
| Insurance | $190 |
| HOA dues | None |
| Total monthly payment | $3,506 |
| DSCR | About 1.16x |
West Michigan and Traverse City earn most of their revenue from late June through Labor Day, with fall color and festival weekends adding more. The Upper Peninsula has summer and snowmobile seasons. Detroit and Ann Arbor are steadier year round, with University of Michigan football and graduation adding peaks in Ann Arbor. Winter is slow on the lakeshore, though ski areas near Boyne and Traverse City add some winter weekends.
Most delays come from missing items. Pull these together first:
Our investor loans are business-purpose loans on non-owner-occupied property. Send the address, price, projected revenue and target leverage. The financing team checks the ratio at a few loan amounts, flags local permit or HOA issues it sees, and comes back with options, including a long-term-rent fallback if the nightly numbers are thin.
We lend in Allegan, Van Buren, Ottawa, Grand Traverse, Emmet and the rest of Michigan's counties. Call (877) 298-1001 or use the form below to get a quote.
Both restrict non-owner-occupied short-term rentals in residential areas. Check current rules with each city.
Investors do not get the principal residence exemption, and taxable value uncaps after a sale.
Traverse City limits non-owner-occupied rentals in residential zones. Confirm current rules with the city.
On some programs, yes, if local rules allow nightly rentals and any license transfers.
You can put more down, look at a sub-1.0 DSCR program or qualify on long-term market rent instead. Our guide to low STR projections, linked below, walks through each option.
Yes. LLC borrowers are standard on DSCR loans, and you sign for the loan personally as the owner of the entity.
No. Our investor loans are business-purpose loans on non-owner-occupied property, not second homes or residences.
Yes. The appraiser estimates market rent, and on short-term rental programs the revenue figure may come from a third-party projection or booking history. Both feed into the ratio.
2-3 competing quotes from 30+ capital sources. No credit pull. No commitment.
By clicking, you provide express written consent to be contacted by LendingStreet (NMLS #1734316) via SMS, phone, or email, possibly using automated technology, regarding your loan inquiry. Reply STOP to opt out. Consent is not required to obtain services. See our Privacy Policy and Terms.