St. Augustine and the St. Johns County beaches draw visitors all year, and plenty of investors want to own a piece of that. If you are buying a vacation rental here, a DSCR loan can let the property’s income do the qualifying instead of your tax returns.

DSCR loans are one of the programs I close most often. Investors like them because the paperwork focuses on the property, not on their personal income. Here is how they work for short-term rentals, and what to check before you write an offer.

How DSCR Works on a Short-Term Rental

DSCR stands for debt service coverage ratio. The lender compares the property’s expected rental income to its monthly payment, including principal, interest, taxes, insurance and any HOA dues. If the income covers the payment by enough of a margin, the loan can work, even if your personal income would not qualify you on paper.

For short-term rentals, lenders typically estimate income in one of two ways:

• The property’s booking history, if it is already operating as a rental, usually 12 months of statements
• A market rent projection from the appraisal, or third-party short-term rental data where the program allows it

Each program treats short-term income a little differently, which is one reason comparing lenders matters.

Check the Local Rules Before You Buy

A great rental projection means nothing if you are not allowed to rent the property short term. Before you go under contract, confirm:

• Zoning. Rules can differ between the City of St. Augustine, St. Augustine Beach and unincorporated St. Johns County
• HOA or condo restrictions, including minimum rental periods
• State licensing. Florida generally requires a vacation rental license through the Department of Business and Professional Regulation
• Taxes. Short-term stays generally owe Florida sales tax and the county tourist development tax

Rules change, so verify with the city, the county and the HOA directly.

What You Will Typically Need

• A down payment. Investment property programs usually require more than primary-home loans.
• Cash reserves after closing
• A credit score that meets the program’s minimum
• An LLC, if you want to close in an entity. Many DSCR programs allow this.
• Insurance quotes early. Coastal insurance and flood coverage can change the numbers significantly.

Run the Numbers Conservatively

Short-term income is seasonal. Build your plan around a realistic year, not your best month. Account for cleaning, management, platform fees, furnishing and vacancy. Any payment or income figures I provide are estimates based on the information provided. Rates and terms are subject to change.

Investing Elsewhere in Northeast Florida?

For long-term rentals and first-time investors, start with DSCR loans for first-time investors in Jacksonville. If you’re buying a vacation rental in St. Augustine or along the beaches, call or text me and we can look at the numbers before you make an offer.

DSCR loans are business-purpose loans for non-owner-occupied rental property. Available for qualified borrowers. Program guidelines apply, and lender overlays may be stricter. All loans are subject to credit approval.

Nathan Young is the founder and president of North Star Mortgage Network, Inc., an independent mortgage brokerage in Jacksonville, serving Florida since April 2000, and the 2025 NAMB Mortgage Broker of the Year. Call or text 904-880-6741. NMLS #325206 | Company NMLS #356789. Equal Housing Opportunity.