Portland's restaurants, ferries and Old Port waterfront make it one of New England's busiest summer destinations, and Maine's coast and lakes pull visitors from Boston and beyond. But Portland and several neighboring towns have chosen to limit investor-owned short-term rentals, so where you buy matters as much as what you buy.
In short: LendingStreet finances short-term rentals in southern Maine with DSCR loans that, on some programs, qualify on projected short-term rental revenue instead of a long-term lease. Loans start at $150,000, the standard minimum DSCR is 1.0x, the minimum credit score is 620 and LLC borrowers are standard. Portland requires STR registration and limits non-owner-occupied units, and South Portland restricts them in residential zones, so many investors look to the Sebago Lake region, beach towns and other communities where rules allow nightly rentals.
The City of Portland requires short-term rentals to be registered every year, with fees that rise for additional units, and it caps the number of non-owner-occupied short-term rental units on the mainland. Island properties in Casco Bay have their own rules. When the cap is reached, new non-owner-occupied registrations may not be available, which can make a purchase plan built on nightly income unworkable.
Rules and caps have changed through council action and ballot questions in recent years. Before you make an offer, confirm with the city whether the specific unit can be registered for short-term use and on what terms.
South Portland voters chose to keep limits on non-owner-occupied short-term rentals in residential zones, so investor STRs there are generally confined to certain zones. Cape Elizabeth, Scarborough, Falmouth, Westbrook and other neighbors each set their own rules, and some require licenses or limit rentals. Each town's code office is the place to check.
Medium-term furnished rentals of 30 days or longer are another option in Portland itself, serving traveling nurses at Maine Medical Center and professionals relocating to the area. Those are generally treated as ordinary rentals, subject to the city's rental registration and housing rules.
The Sebago Lake region, including Naples, Raymond, Casco, Standish and Bridgton, is about 30 to 45 minutes from Portland and has long been a summer rental market. Old Orchard Beach, Kennebunkport, Kennebunk, Wells and York draw beach crowds, though several have licensing or registration programs. Inland, Bethel near Sunday River adds a winter ski season, and Freeport draws shoppers year round.
Each town sets its own rules, and some have adopted limits as the STR market grew. Confirm with the town office before you buy.
| Area | Main draw | Season |
|---|---|---|
| Portland peninsula | Food, waterfront, ferries | Summer and fall; limited by city cap |
| Sebago Lake region | Lakes, boating, camps | Summer, some fall |
| Old Orchard Beach to York | Beaches | Summer |
| Bethel and Sunday River | Skiing, hiking | Winter and summer |
Maine applies a state tax on short-term lodging, and booking platforms collect it for many hosts. If you rent directly, you may need to register with Maine Revenue Services and file yourself. Portland and some other towns add registration fees but not a separate local lodging tax in most cases; confirm the current requirements.
Guest taxes are not income for DSCR. Underwrite on the revenue you keep after taxes and platform fees, and keep records in case the state asks for them.
This example is illustrative and not a quote. A Portland investor buys a three-bedroom house with water access in the Sebago Lake region for $520,000. A third-party projection estimates average revenue of $4,400 a month across the year, heavily weighted to July and August. At 75% LTV the loan is $390,000.
Estimated principal and interest on a 30-year loan is about $2,714. Property taxes are budgeted at $400 a month and a short-term rental insurance policy at $230, for a total payment of about $3,344. DSCR on average projected revenue is about 1.32x.
In a January month earning $1,800, revenue covers well under the payment, which is normal for a summer market. Lenders look at the annual figure, but you should hold reserves for the off-season.
| Item | Annual average month | Winter month |
|---|---|---|
| Loan amount (75% LTV) | $390,000 | $390,000 |
| Estimated principal and interest | $2,714 | $2,714 |
| Taxes and insurance | $630 | $630 |
| Total monthly payment | $3,344 | $3,344 |
| Revenue | $4,400 | $1,800 |
| Coverage | About 1.32x | About 0.54x |
Southern Maine's STR calendar is concentrated. Late June through Labor Day carries most of the year's revenue on the coast and lakes, and foliage season in late September and October adds strong weekends. Winter is quiet outside ski towns, and spring is often called mud season for good reason.
A projection should reflect this. A lender will check it against comparable listings, and a projection that spreads summer rates across the year will not hold up.
Many lake and coastal homes are older camps or cottages, some originally built for summer use only. Confirm the house is winterized and heated if you plan year-round rentals, and check the heating system, whether oil, propane or heat pumps. Insurance on waterfront and older homes can be expensive.
Rural properties often have private wells and septic systems. Septic capacity can limit the number of guests a town allows, and some towns tie STR approval to septic design.
Maine charges a real estate transfer tax that is split between buyer and seller. Property taxes are set town by town, and lake towns sometimes have lower rates than Portland but higher values. Ask for the town's current tax bill and any recent revaluation.
Furnishings, linens and setup costs are generally paid from your own funds rather than the loan.
Send the address, price, revenue projection or booking history and confirmation of local approval or registration. The financing team will run the ratio on the annual figure and show leverage options.
Our investor loans are business-purpose loans on non-owner-occupied property. Call (877) 298-1001 or use the form below to get a quote.
Only if the city can register the unit. Portland caps non-owner-occupied short-term rentals on the mainland, so confirm availability before buying.
South Portland limits non-owner-occupied short-term rentals in residential zones. Check which zones allow them.
On some programs, yes, using a third-party projection or booking history checked against comparable listings.
The Sebago Lake region, beach towns from Old Orchard Beach to York and the Bethel area are common choices. Each town sets its own rules.
Maine's state lodging tax applies to short-term stays. Platforms collect it for many hosts.
Lenders look at annual revenue, so a strong summer can carry slow months. Hold reserves for winter and spring.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
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