85% LTV on a Short-Term Rental: Who Qualifies, What’s Excluded, and the Real Cost of the Extra 5%
A buyer under contract on a $450,000 short-term rental in a market that still cash-flows doesn’t want to put $90,000 down if $67,500 gets the same deal closed. That’s the pitch behind the 85% LTV tier on a short-term rental DSCR loan: five points of extra leverage over the standard program, with a narrower set of boxes to check to get there.
Qualifying for 85% LTV on a short-term rental purchase takes a 740+ FICO score, a projected DSCR of 1.25x or higher, documented investor experience, a loan amount between $250,000 and $2,000,000, and a purchase transaction — this tier is not available on a refinance. Miss any one of those conditions and the file prices at a lower LTV tier instead.
What “Experienced Investor” Actually Means Here
In this program, experience means at least one financed investment property the borrower has closed and held in the past 36 months. It does not have to be a short-term rental specifically, but a track record of managing one helps the file. A first-time investor buying their first Airbnb is not shut out of DSCR financing altogether, but the 85% LTV tier specifically is not available to them — that buyer is looking at 70–80% LTV depending on credit and loan size, business-purpose and non-owner-occupied either way.
The Markets This Tier Won’t Touch
The 85% LTV tier carves out a list of vacation-heavy counties where short-term rental income is treated as too seasonal or too regulation-exposed to support the extra leverage. A deal in one of these counties is still financeable under the standard short-term rental DSCR program — it just isn’t eligible for 85%.
| State | Excluded counties |
|---|---|
| Florida | Sarasota, DeSoto, Charlotte, Lee, Collier, Miami-Dade |
| Colorado | Denver, El Paso, Pueblo, Boulder, Larimer |
| Texas | Travis, Williamson, Hays, Bexar, Medina, Comal, Nueces, San Patricio, Kleberg |
| Tennessee | Sevier |
| Oklahoma | McCurtain |
A deal in, say, Comal County, Texas, prices identically to one outside it on every other line of the term sheet — rate, DSCR floor, reserves — except the LTV ceiling drops from 85% to the standard program maximum. That’s the one fact on this page that doesn’t transfer to a page about fix-and-flip financing or a different loan program: it’s specific to where the collateral sits and how this particular tier underwrites short-term rental seasonality.
The Arithmetic: 80% vs. 85% on a $450,000 Purchase
Take a $450,000 purchase, 30-year amortization, and indicative rates of 7.25% at 80% LTV versus 8.00% at 85% LTV — the roughly 0.75-point premium this tier typically carries over the standard leverage point. These are illustrative figures to show the arithmetic, not a quote; your actual rate depends on credit, DSCR, and loan size.
| 80% LTV | 85% LTV | |
|---|---|---|
| Loan amount | $360,000 | $382,500 |
| Cash to close (down payment) | $90,000 | $67,500 |
| Indicative rate | 7.25% | 8.00% |
| Monthly P&I (approx.) | $2,455 | $2,806 |
The 85% tier frees up $22,500 in cash at closing and costs about $351 more a month. Divide one by the other and the breakeven sits around 64 months — a little over five years. If the plan is to hold the property more than five years and the $22,500 isn’t earning a better return parked somewhere else, the 80% tier is cheaper over the life of the loan. If the plan is to redeploy that cash into a second property, or the investor doesn’t have an extra $22,500 sitting around without stretching reserves thin, the extra 5% of leverage is the difference between closing this quarter and waiting.
When This Is the Wrong Call
Skip the 85% tier, and default to 80% or lower, when the deal’s projected DSCR at 85% leverage lands right at 1.25x with no cushion — a single slow month of bookings pushes the file below the floor on paper even if cash flow is fine in practice. Skip it when the property sits in one of the excluded counties above; there’s no exception to request. Skip it when the extra $351 a month is the difference between a comfortable reserve position and a thin one — reserves get checked at closing, not just DSCR. And skip it on a first short-term rental purchase with no prior investment property in the last 36 months; that file isn’t eligible for this tier regardless of credit score.
What to Have Ready
- A short-term rental income estimate (an appraiser’s rent schedule, not a spreadsheet of hoped-for AirDNA numbers) supporting the 1.25x DSCR floor at the loan amount requested.
- Proof of at least one investment property closed and held in the past 36 months.
- Two to three months of reserves after closing, documented in the borrowing entity’s or guarantor’s accounts.
- An LLC or similar business entity to close in — this is a business-purpose loan against a non-owner-occupied property, not a consumer mortgage.
Every figure above is indicative and subject to underwriting on the actual file — nothing here is a committed rate, term, or approval. If the deal is in a served state and outside the excluded counties, the short-term rental deal check is the fastest way to find out which LTV tier it actually qualifies for; for the income-sizing question specifically, see how lenders treat short-term rental income under DSCR. The underlying program details are on the 85% LTV DSCR loan page, and current indicative pricing is on the rates page.