DSCR loans by state

DSCR Loans in Vermont

Vermont is the second-least populous state, creating a very small investment market. Burlington is the primary metro with UVM and healthcare demand. Ski resort towns (Stowe, Killington, Stratton) generate strong STR income during winter and increasingly during summer foliage season. The state has a severe housing shortage driving up rents.

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What is a DSCR loan?

A Debt Service Coverage Ratio (DSCR) loan is a type of investment property mortgage where the borrower qualifies based on the property's rental income rather than personal income. Lenders calculate the DSCR by dividing the property's gross rental income by the total debt obligation (principal, interest, taxes, insurance, and HOA). A ratio of 1.0 means the property breaks even; most lenders require a DSCR of 1.0–1.25 to approve the loan.

Because DSCR loans do not require W-2s, tax returns, or employment verification, they are popular among self-employed investors, LLC-based portfolios, and foreign nationals. Typical terms include 30-year fixed or adjustable rates, 75–80% LTV, and minimum credit scores of 660–700. State-level factors like property taxes, insurance requirements, and landlord-tenant laws directly affect the DSCR calculation and vary significantly across markets.

Vermont Property Taxes & DSCR Impact

Vermont has an above-average effective property tax rate of approximately 1.73%. The state uses an "education property tax" that constitutes the majority of the bill. Non-homestead rates are higher than homestead rates, directly affecting investment properties.

High property taxes (1.73%) and high income taxes (6.6–8.75%) create a heavy expense burden. However, Vermont's severe housing shortage has driven rents up significantly. Ski-area STR properties can generate premium income but face seasonality. Burlington long-term rentals benefit from very low vacancy due to constrained supply.

Vermont Landlord-Tenant Laws

Vermont is tenant-friendly. The state requires "no cause" eviction notice of 60 days (reduced from 90 days in recent reform). For nonpayment, a 14-day notice is required. Court proceedings can take 6–10 weeks. Burlington has additional tenant protections.

Vermont Income Tax for Investors

Vermont has a graduated income tax with a top rate of 8.75% on income over $229,500. Most rental investors will face the 6.6% or 7.6% brackets. Combined with high property taxes, the overall tax burden is heavy.

Insurance Costs in Vermont

Insurance costs are moderate at $1,100–$1,700 per year. Vermont has minimal natural disaster risk. Some flood risk exists along rivers and in valley areas.

Top Investor Markets in Vermont

•Burlington
•South Burlington
•Rutland
•Stowe/Morrisville
•Brattleboro

Licensing Requirements

Vermont requires mortgage lenders and brokers to be licensed through the Vermont Department of Financial Regulation.

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