By Eli Sanderlin · April 25, 2026 · 14 min read

DSCR Loans for Coastal Florida STRs: The Complete Underwriting Playbook

Short-term rental investors in coastal Florida live and die on DSCR. Here's exactly how the lenders I work with underwrite Airbnb income — what gets accepted, what gets rejected, and how to structure your deal to land in the "approved" pile.

What DSCR actually means (and why it matters)

DSCR stands for Debt-Service Coverage Ratio. It's the ratio of the property's gross rental income to its housing payment (PITIA — principal, interest, tax, insurance, association). Formula:

DSCR = Gross Rental Income / PITIA

Examples:

Property generates $5,000/mo in rent. PITIA is $4,200/mo. DSCR = 1.19.
Property generates $7,500/mo. PITIA is $5,200. DSCR = 1.44.
Property generates $3,800. PITIA is $4,500. DSCR = 0.84 (below 1.0 = "negative cash flow" on a debt-coverage basis).

The DSCR tier system (lender-by-lender pricing)

Most DSCR lenders price your loan based on which DSCR tier you fall into:

1.25+: Best pricing. "Coverage with cushion."
1.10–1.24: Standard pricing. Healthy deal.
1.00–1.09: Tier 2 pricing. ~0.25–0.50% rate hit.
0.75–0.99: "Sub-1 DSCR" — niche lenders only. ~0.75–1.5% rate hit, 30%+ down often required.
Below 0.75: Most lenders won't touch. Restructure: increase down, change strategy, or wait.

How DSCR lenders compute STR income

This is where coastal Florida gets interesting. There are three main methods:

Method 1: Long-term equivalent rent

Even for a property you're going to operate as STR, some lenders qualify you off the property's market rent if it were rented as a 12-month lease. Conservative — usually a haircut from STR potential — but the easiest underwrite. Best for coastal markets where LTR rents are robust (most of the Keys, Naples, Sarasota).

Method 2: Projected STR income (1007 with STR addendum)

The appraiser adds an STR rent schedule based on comparable Airbnb / VRBO listings. Lender uses ~75–85% of projected gross to account for vacancy, mgmt fee, and platform fees. Available from a growing list of DSCR lenders. Best for newer STR markets where the property doesn't have a track record yet.

Method 3: T-12 actual STR income

Trailing 12 months of actual booking data — Airbnb / VRBO export, AirDNA report, or co-host PMS export. Lender uses ~85–95% of net (after platform fees). Best for properties already operating as STR with a track record. Highest income credit; tightest documentation requirements.

What documentation lenders actually want

For T-12 method: Airbnb / VRBO transaction history (CSV export), 12 months of bank statements showing platform deposits, tax return Schedule E (or Schedule C if Airbnb host), and a property management agreement if applicable.
For projected method: Appraiser's 1007 rent schedule with STR comparables, optional AirDNA Markets report, and proof of legal STR status.
For long-term method: Just the 1007 / 1025 with traditional rent comparables.
Property documents always required: STR license / vacation rental permit (if jurisdiction requires), HOA bylaws confirming STR is allowed, current insurance (or quote), property tax statement, and HOA financials if applicable.

The coastal Florida insurance trap

This is where I see deal after deal die. Here's the pattern:

Investor finds a Keys property with $9,000/mo gross STR projection.
Runs the math with $4,000/yr insurance assumption. DSCR pencils at 1.42.
Goes under contract. 21 days into escrow gets the binder back: $14,500/yr.
New DSCR: 1.07. Now in tier 2 pricing. Rate goes up 0.5%. Now DSCR is 1.01. Now lender wants 30% down instead of 25%.
Deal renegotiated, contract amended, or dies.

The fix: Quote insurance BEFORE you go under contract. 24-hour turnaround through me. It's the single highest-leverage thing you can do as a coastal investor.

STR legality — the question every lender asks

DSCR lenders increasingly require proof that the property is legally allowed to operate as an STR. Different markets, different rules:

Monroe County: 28-day minimum in most unincorporated areas. Some grandfathered shorter-rental licenses exist; ask the seller for the license number.
Marathon: 7-night minimum in most zones; vacation rental license required.
Key West: No new transient licenses; existing ones are grandfathered and have transferred with the property in past sales.
Islamorada: 28-day minimum in most zones.
Naples / Marco: Local ordinance applies; many areas allow STR with permit.
Sarasota / Anna Maria Island: Anna Maria has stricter rules than the city of Sarasota.

Sub-1 DSCR strategies (when the deal looks bad)

Sometimes the property pencils to 0.85 or 0.90 DSCR. Don't walk away yet. Levers:

Increase down payment. Going from 25% to 35% drops PITIA significantly.
Switch to 10-year IO (interest only). Cuts P&I substantially during IO period; helps cash flow but increases long-term cost.
Restructure insurance. Higher deductible, wind mit credits, re-shop carriers.
Add a co-borrower with strong DSCR property. Some lenders allow blended DSCR across multi-property files.
Use projected income, not LTR. If the property has STR potential, getting STR projection on the 1007 can lift gross income 50–100%.
Find the niche lender. A handful specialize in 0.75–1.0 DSCR deals. I have them on my panel.

Common mistakes I see investors make

Trusting AirDNA without sanity check. AirDNA can over-project on emerging markets. Always cross-check with actual Airbnb listings and conservative occupancy.
Ignoring property tax reset. Florida resets property tax to current sale price for non-homestead. Your tax line will be 2–4× the seller's bill.
Forgetting HOA STR rules. Even if Monroe County allows STR, your HOA might forbid it. Read the bylaws before signing.
Underestimating capex. Coastal STR properties need new appliances every 3–5 years (saltwater destroys them faster), exterior repaint, and HVAC service. Budget 1.5% of value annually.
Choosing a national DSCR lender that doesn't understand Florida coastal. Half of them sound great until they hit the insurance binder.

Lenders I actually use for coastal FL DSCR

I shop a panel of 60+ DSCR lenders on every deal. The right one depends on FICO, DSCR, property type, and reserves. I don't publish the full panel for competitive reasons — but I'll happily tell you which ones I'm targeting for your specific deal on a 30-minute call.

The honest deal-screen checklist

Before you sign a contract on a coastal Florida STR property:

Get an insurance quote (HOI + wind + flood) for the actual property.
Get the STR license / permit confirmation in writing.
Pull AirDNA Market AND look at 10+ actual nearby Airbnb listings.
Calculate DSCR at 25%, 30%, 35% down. Find the down payment that gets you to 1.20+.
Add 1.5% of value as annual capex reserve. Recalculate cash-on-cash after that.
Verify HOA allows STR if applicable.
Check property tax reset (Monroe sees ~2.5–3× assessed value reset on resale).

If the deal still pencils after all that, you have a winner. If it doesn't, you've saved yourself a 6-month ulcer.

Run my DSCR Book Investor Call