We were just planning on doing a conventional 30yr fixed rate (looking like ~7%) through our existing broker and contacting a local (local to the STR) credit union to see what they can offer.

Fico 10T actually goes back and scores off a trailing amount of months etc.

Have you contacted any banks or credit unions in your market? 

Tenant Default: 0-5% probability of eviction or early lease termination.Section 8: Class A rents are too high and won’t be approved.Vacancies: 5-10%, depending on market conditions.Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.Class B Properties:Tenant Pool: Majority of FICO scores 620-680, some blemishes, no convictions/evictions in last 5 years.Tenant Default: 5-10% probability of eviction or early lease termination.Vacancies: 10-15%, depending on market conditions.Cashflow vs Appreciation: Typically, 1-3 years for positive cashflow, balanced amounts of relative rent & value appreciation.Section 8: Class B rents are usually too high for the Section 8 program.Class C Properties:Tenant Pool: Majority of FICO scores 560-620, many blemishes, but should have no convictions/evictions in last 3 years.

Quote from @Adam Zach: Hey BP community,We’ve been scaling a rent-to-own single-family housing model across the Midwest and Southeast and have run into a wall with traditional DSCR lenders.We’ve been working with small local banks and credit unions to finance deals, but as we grow, we’re looking for more scalable lending partners.

You might be better off working with a bank or credit union that does not have EPO. 

Try HSBC, Figure, Quorum, Navy Federal and any small community bank and credit union near your property.

I usually see the best rates and terms from our local credit union on this property type.

If it’s a commercial loan and its considered "Mixed use" I have seen 20% down in some cases.In most cases a true apartment building 5+ is going to require 20% or more regardless and it comes down to Higher credit scores, landlord experience, Assets/reserves and term.

It's amazing that I clearly have the credit score needed for my listing and not one person meets it.