Seattle caps how many short-term rentals one operator can run. Over the Cascades and out on the islands, Leavenworth, Lake Chelan and the San Juans are where most Washington STR investors look.
In short: LendingStreet finances Washington short-term rentals with DSCR loans that can qualify on projected rental revenue on some programs, starting at $150,000 with a 620 minimum credit score and LLC borrowers allowed. Seattle limits operators to their primary residence plus one additional unit, and Leavenworth, Chelan and San Juan County cap or zone STR permits. State law also requires STR operators to carry liability insurance.
Leavenworth, the Bavarian-themed town in the Cascades, draws visitors for Oktoberfest, the Christmas lighting festival, skiing at Stevens Pass and summer river trips. Lake Chelan and Manson are summer lake and wine markets, and the Methow Valley around Winthrop draws hikers and cross-country skiers.
The San Juan Islands, including Friday Harbor and Orcas Island, are reached by ferry and rent heavily in summer. On the coast, Ocean Shores, Long Beach and Westport serve beach visitors, and Whidbey Island draws weekenders from Seattle. Spokane and Coeur d'Alene-area spillover add eastern options.
| Market | Typical property | What drives bookings | Rule to check |
|---|---|---|---|
| Leavenworth | Cabins, chalets | Festivals, skiing, river trips | Permits capped in residential zones |
| Lake Chelan and Manson | Lake homes, condos | Summer lake and wineries | City and county permit limits |
| San Juan Islands | Cottages, island homes | Summer ferry trips, whale watching | County permit caps in some areas |
| Seattle | Condos, townhomes | City travel, cruises, events | Primary residence plus one unit |
Seattle requires an STR operator license and limits each operator to two units: their primary residence and one additional unit. That makes Seattle a poor fit for scaling a nightly rental portfolio. Leavenworth and Chelan cap or zone STR permits in residential areas, and San Juan County limits new vacation rental permits in parts of the islands.
Washington state law requires STR operators to register for taxes, carry liability insurance (or rely on qualifying platform coverage) and post safety and emergency information for guests. Check local permit availability before you buy, because a permit may not transfer with the property.
A standard DSCR loan compares a property's monthly rent with its full monthly payment: principal, interest, taxes, insurance and any HOA dues. For a short-term rental, some programs replace the long-term lease with a projection of nightly revenue, typically from a third-party revenue report built on comparable listings nearby.
Underwriting looks at the annual revenue figure divided across 12 months, not your best month. Some programs also review the property's own booking history when it has one, and some adjust the projection for expenses or seasonality. Each program sets its own method, so ask how the figure will be used before you lock in a price.
This example is illustrative and not a quote. An investor buys a permitted three-bedroom chalet in Leavenworth for $785,000. A third-party report projects $72,000 in gross annual short-term rental revenue, or about $6,000 a month. Taxes are budgeted at $520 a month and insurance at $200.
At 75% LTV the loan is $588,750, estimated principal and interest is about $4,177, and the full payment is about $4,897, for a DSCR of about 1.23x. If the year comes in 15% below the projection, the ratio drops to about 1.04x.
At 65% LTV the loan is $510,250, the payment falls to about $4,340 and the DSCR rises to about 1.38x, which leaves more cushion for a slow season in Leavenworth.
| Item | 75% LTV | 65% LTV |
|---|---|---|
| Loan amount | $588,750 | $510,250 |
| Estimated principal and interest | $4,177 | $3,620 |
| Property taxes | $520 | $520 |
| Insurance | $200 | $200 |
| Total monthly payment | $4,897 | $4,340 |
| Projected monthly revenue | $6,000 | $6,000 |
| DSCR | About 1.23x | About 1.38x |
| DSCR if revenue is 15% lower | About 1.04x | About 1.18x |
Washington has no state income tax, but short stays carry state and local sales tax plus local lodging taxes. Washington's real estate excise tax at closing is graduated, so higher-priced homes pay a higher rate on the portion above each threshold.
Wildfire risk east of the Cascades, including around Chelan, Leavenworth and the Methow Valley, has pushed insurance costs up and limited options on some properties. Coastal homes face wind and flood questions, and island properties can cost more to insure and maintain.
The San Juans and Lake Chelan earn most of their revenue from late June through Labor Day. Leavenworth is more balanced, with fall Oktoberfest, the December lighting festival, winter skiing and summer river trips. Coastal towns are busiest in summer, with storm-watching weekends in winter. Wildfire smoke can soften late-summer bookings east of the mountains.
A long-term tenant usually pays the utilities and handles day-to-day upkeep. A nightly guest does not. Plan on cleaning fees, laundry, utilities, internet, consumables, platform charges, more frequent maintenance and management, which for remote owners can be a sizable share of revenue. Budget for furnishing the property, too.
The ratio a lender calculates covers the debt, not these costs. Treat 1.0x as a floor for the loan, not a target for your business, and build your own monthly budget alongside the projection.
Our investor loans are business-purpose loans on non-owner-occupied property. STR DSCR loans follow the same basics as our long-term rental loans, with the income coming from projected or actual nightly revenue.
A complete file gets a faster answer. Gather these items, then get a quote through the form below or by calling (877) 298-1001.
Seattle limits operators to their primary residence plus one additional unit. That makes it a hard market for building a nightly rental portfolio.
Yes. Leavenworth caps STR permits in residential zones. Confirm a permit is available for the property and whether it can transfer to you.
State law requires operators to carry liability insurance or rely on qualifying platform coverage, and to post safety information for guests.
Insurance can cost more and options can be limited. Smoke can also reduce late-summer bookings. Get a quote early and include it in the payment.
The minimum is 620. Stronger credit and more equity can open more program options. No W-2s or tax returns are required.
Yes. Most of our STR borrowers close in an LLC and sign for the loan personally.
Yes. Both rate-and-term and cash-out refinances are available, and actual revenue history can be used. Cash-out seasoning varies by program.
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