Short-term rentals can earn more than traditional long-term rentals, but their income is less predictable, so lenders look at them differently. DSCR Airbnb/ STR loans are designed for this kind of property.
What Is a DSCR Airbnb/ STR Loan?
It is an investor loan where qualification is based on the rental property’s income rather than your personal tax returns. For short-term rentals, lenders may estimate income from projected rental revenue, historical earnings, or market data, depending on the program.
Why Investors Choose Them
- Cash-flow-based qualification instead of W-2 and tax return documentation
- Flexible ownership, with many programs allowing purchase through an LLC
- Options for different property types, including single-family homes, condos, townhomes, and multi-unit properties
- Purchase, refinance, and cash-out options, depending on the program
How Lenders May Estimate Income
Programs differ, but common approaches include:
- Historical income: past booking and payout records for an existing rental
- Projected income: a market analysis or rental income estimate for a new purchase
- Long-term rent comparison: some lenders use a conventional rent estimate instead
Ask your lender which method applies to your situation, since it can change your qualifying ratio.
How to Prepare Your File
- Gather booking records if the property already operates as a rental.
- Check local rules. Many cities require permits, licenses, or occupancy taxes for short-term rentals, and some restrict them.
- Plan for seasonality. Income often rises and falls through the year.
- Review your reserves. Lenders often want to see cash on hand after closing.
- Set up your entity. If you will hold the property in an LLC, get the paperwork in order early.
Know the Trade-Offs
DSCR loans can carry different pricing and down payment requirements than conventional financing. Compare options and understand any prepayment terms before you commit.
Talk to a DSCR Specialist
Short-term rental financing works best when the lender understands the property type and the local market. Cole Boren of DSCR Loans With Cole works with investors across Nevada and Utah. Call 702 275 5997 or email cboren@cmghomeloans.com.
About the author: Cole Boren is a DSCR lending specialist with CMG Home Loans. Visit https://www.dscrloanswithcole.com/. NMLS# 384591 | Company NMLS #1820. Programs, rates, and terms are subject to change and approval.
