Finance
What is a 'short-term rental' (Airbnb, VRBO) and how does it affect Delaware real estate financing?
AShort-term rentals have no impact on mortgage financing in Delaware
BProperties intended primarily as short-term rentals may face different lender treatment — classified as investment properties (higher rates, larger down payment), subject to local Delaware regulations, and sometimes ineligible for certain loan programs✓ Correct
CShort-term rentals qualify for better mortgage rates than long-term rentals
DShort-term rentals are prohibited in all Delaware residential zones
Explanation
Short-term rentals (STRs) used primarily for vacation rental income are treated as investment properties by most lenders — higher rates (0.5–0.
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Key Terms to Know
Debt-to-Income Ratio (DTI)
A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Math Concepts
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