Does the lender check local ordinances for me?

The desk will ask for the licence or ordinance in a known-regulated market, but confirming eligibility is ultimately the borrower's responsibility.

Can an HOA ban short-term rentals even if the city allows them?

Yes. HOA and condo declarations operate independently of city zoning and commonly set their own minimum-stay rules.

What happens if my city won't issue new licences?

The property is typically underwritten on long-term rent, and the loan needs to work on that lower figure.

Should I check the recorded declaration or the HOA's rules and regulations?

Both — restrictions can appear in either document, and rules and regulations can be amended more easily than the declaration.

What if the rules change after I close?

That risk sits with the borrower; ask the desk in advance how a change in local law would be treated on your note.

LESSON 4 OF 65 MIN READ

Which local rules can stop a short-term rental from qualifying?

The single most common reason a short-term rental file collapses is not the underwriting — it is a local rule discovered too late. Cities increasingly cap, licence or zone short-term rentals to owner-occupied primary residences only, and many HOAs and condo declarations ban rentals under thirty days outright regardless of what city hall permits. Where the short-term use is not legally permitted, the property is underwritten on long-term rent instead, and the loan only works if that lower figure carries the payment. Checking the ordinance and the HOA declaration before ordering an appraisal is the cheapest step in the whole process and the one most often skipped.

THE NUMBERS

Minimum DSCR	0.75 (0.75–0.99 prices at +62.5 bps, 70% LTV cap)
Maximum LTV	80% purchase or rate-and-term · 75% cash-out
FICO floor	660 (below that the desk does not lend)
Loan size	$100K – $3M single · $10M portfolio
Reserves	6 months PITIA · 12 months on a portfolio
Prepay options	5-4-3-2-1 par · 3-2-1 +25 bps · 1-yr +50 bps · none +87.5 bps
Typical days to close	21–30 days from a signed term sheet
Rate sheet	Silt Rate Desk — Market Composite Sept 2026 · effective 2026-09-01

ILLUSTRATIVE — published program floors, not a quote or a commitment to lend. Subject to underwriting, appraisal and final credit approval.

What do city ordinances typically restrict?

Municipal short-term rental rules commonly do one or more of: require a licence or permit per address, cap the total number of licences issued in a given zone, limit short-term rentals to a property that is also the operator's primary residence, or restrict them to specific overlay districts. Some cities distinguish between a hosted rental, where the owner is present, and a whole-unit rental, and treat the two very differently for licensing purposes. None of this is uniform, and the same state can contain wildly different rules from one city to the next.

What does a licence or permit requirement mean for the loan file?

Where a jurisdiction requires a licence, underwriting generally wants to see either the issued licence or clear evidence that one can be obtained for this specific address before closing treats the property as an operating short-term rental. A licence that is capped city-wide and currently unavailable — some markets have simply stopped issuing new ones — is a real obstacle, not a paperwork delay, and should be confirmed with the city directly rather than assumed from a listing site's claim that the area is 'STR-friendly'.

How do HOA and condo declarations differ from city rules?

An HOA or condo declaration operates independently of city zoning, and a great many of them set a minimum lease term — commonly thirty, sixty or ninety days — that flatly forbids the short-term use regardless of what the municipality allows. This is the restriction most often missed, because a buyer checks the city's short-term rental page and stops there. The declaration, and any amendments to it, need to be pulled and read before assuming the strategy is available in a specific building or community.

What happens to the DSCR file when the use is not permitted?

The desk falls back to underwriting the property on long-term market rent, sourced from the appraiser's rent schedule or a signed lease, rather than projected or actual short-term revenue. That figure is frequently well below what the short-term strategy would have produced, and if it does not clear the DSCR floor on its own, the loan does not close at the size or leverage the borrower was expecting. This is not a lender penalty — it reflects that the higher-revenue use is not legally available to the property.

Who verifies this, and when?

Verification is ultimately the borrower's responsibility, though the desk will ask for the licence, a copy of the ordinance, or the relevant page of the HOA declaration in any market known to regulate short-term use. This should happen at application, before an appraisal is ordered, not discovered when the appraiser's comments flag a restriction the file did not anticipate. A quick call to the city's business licensing office and a read of the HOA's rules and regulations, not just the recorded declaration, is worth the time before you go under contract.

What if the rules change after closing?

Ordinances and HOA rules can and do change after a loan closes, and a city that permitted short-term rentals at origination can later restrict or ban them. That risk sits with the borrower, not the lender, and is a reason to treat a short-term rental strategy as one that could need to revert to long-term leasing at some point. Confirming whether a note carries any covenant tied to the property's use, and how a change in local law would be treated, is a question for the desk and, on anything with legal weight, for an attorney.

Same property, two possible outcomes

Property	Condo unit, city permits STR with a licence
City rule	Licence available, no cap in this zone — permitted
HOA declaration	No minimum-stay restriction found — permitted
Basis used	Twelve-month platform revenue, $6,200 / mo
Result	DSCR calculated on STR revenue
Alternative scenario — same unit	HOA declaration requires 90-day minimum stays
Basis used instead	Appraiser's long-term rent, $2,700 / mo
Result	DSCR recalculated on long-term rent only

The HOA restriction, not the city ordinance, is what determines the outcome in this example. Illustrative only.

WHAT WE NEED FROM YOU

Copy of the city ordinance or licensing page. Confirming whether the address is eligible for a licence.
Issued short-term rental licence. Or evidence one can be obtained before closing.
HOA or condo declaration and rules. Specifically the minimum-stay or rental-restriction language.
HOA estoppel or confirmation letter. Where available, confirming current rental policy in writing.
Entity documents. Articles, operating agreement and EIN letter.

FREQUENT QUESTIONS

Does the lender check local ordinances for me?: The desk will ask for the licence or ordinance in a known-regulated market, but confirming eligibility is ultimately the borrower's responsibility.
Can an HOA ban short-term rentals even if the city allows them?: Yes. HOA and condo declarations operate independently of city zoning and commonly set their own minimum-stay rules.
What happens if my city won't issue new licences?: The property is typically underwritten on long-term rent, and the loan needs to work on that lower figure.
Should I check the recorded declaration or the HOA's rules and regulations?: Both — restrictions can appear in either document, and rules and regulations can be amended more easily than the declaration.
What if the rules change after I close?: That risk sits with the borrower; ask the desk in advance how a change in local law would be treated on your note.

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