STR DSCR vs LTR DSCR: Which Qualifies More Easily?

The differences that matter

• Rate — STR carries an overlay over standard DSCR; LTR does not.
• Income — STR uses a projection (cap-adjustable); LTR uses a signed lease.
• Legality — STR is gated by city rules and night caps; LTR rarely is.
• Down payment — STR usually wants 25–30%; LTR can go a touch lower.
• Insurance — STR coverage is priced higher and weighs on PITIA.

Which qualifies more easily

In a legal, uncapped market with a real nightly premium, STR can post a higher DSCR than the same property as a long-term rental — the extra revenue outruns the overlay. In a capped, permitted, or primary-residence city, LTR (or mid-term) usually qualifies more easily, because its income isn’t haircut and it carries no overlay.

When LTR is the smarter path

Choose LTR/MTR when the city restricts STR, when the nightly premium over long-term rent is thin, or when you want the simpler, steadier underwrite. The math is property-specific — run the address as an STR and compare it to the long-term rent comp before deciding.