Can you finance an Airbnb property?

Yes. DSCR (Debt Service Coverage Ratio) loans are designed specifically for investment properties including short-term rentals. They qualify based on the property's rental income rather than your personal income, so no W-2s or tax returns are required. These are investment-only loans with a typical down payment of 20-25%.

What is a DSCR loan for short-term rentals?

A DSCR loan measures whether the property's rental income covers the mortgage payment. The ratio is calculated by dividing net rental income by the total monthly payment (PITIA). For short-term rentals, lenders apply a 20% expense factor to gross rent to account for platform fees, cleaning, furnishing, and vacancy. A DSCR of 1.0 or higher means the property covers its own payment.

What documentation do I need for STR financing?

Lenders accept several forms of income documentation for short-term rentals: a Form 1007 single-family comparable rent schedule, an AIRDNA Rentalizer report projecting market rents, 12 months of platform booking history from Airbnb or VRBO, or bank statements showing rental deposits. The documentation accepted depends on whether the property is a new purchase or a refinance.

Can I refinance an existing Airbnb property?

Yes. If you already own a short-term rental, you can refinance into a DSCR loan using your actual rental history. Twelve months of platform booking history or bank statements showing rental income make documentation straightforward. This can be useful for pulling equity out to buy another property or lowering your rate.

How to Finance an Airbnb or Short-Term Rental Property

Short-term rental properties can be excellent investments, but financing them works differently than a traditional home purchase. Conventional lenders often won't count Airbnb income for qualifying. The solution is a DSCR loan — a mortgage product designed specifically for investment properties that qualifies on the property's rental income, not yours.

How DSCR Works for Short-Term Rentals

DSCR stands for Debt Service Coverage Ratio. It measures whether the property's income covers its mortgage payment. For short-term rentals, lenders apply a 20% expense factor to gross rental income to account for platform fees, cleaning costs, furnishing, and vacancy.

Line Item	Amount
Gross Monthly Rent	$4,000
Minus 20% Expense Factor	-$800
Net Rental Income	$3,200
Monthly PITIA (Principal, Interest, Taxes, Insurance, HOA)	$2,800
DSCR Ratio	1.14 ($3,200 ÷ $2,800)

A DSCR of 1.0 means the property breaks even. Above 1.0, it cash flows. Most lenders want to see at least 1.0, and better ratios get better pricing.

Income Documentation Options

Documentation Type	What It Is	Best For
Form 1007	Single-family comparable rent schedule prepared by an appraiser	New purchases with no rental history
AIRDNA Rentalizer	Market-based projection of short-term rental income for the specific property	New purchases — shows STR-specific income potential
12-Month Platform History	Actual booking and income data from Airbnb, VRBO, or other platforms	Refinancing an existing STR
Bank Statements	12 months of deposits showing rental income	Refinancing with income from multiple platforms or direct bookings

DSCR Loan Requirements for STR

Requirement	Typical Guideline
Property Use	Investment only — cannot be your primary residence
Down Payment	20–25% (75–80% LTV)
Credit Score	620 minimum, better pricing at 700+
Loan Amounts	Up to $3.5M
Income Documentation	None required from borrower — qualification is based on property income
Reserves	6–12 months PITIA depending on DSCR and credit

Condo Hotels and Unique Properties

Condo hotels — units in properties that operate as hotels but are individually owned — are a popular choice for short-term rental investors. Not all DSCR lenders finance condo hotels, but programs do exist. The key requirements are typically a higher down payment (25–30%) and the property must be in an approved project. If you're looking at a condo hotel in a resort market, ask about eligibility before making an offer.

Refinancing an Existing Short-Term Rental

If you already own a short-term rental, refinancing into a DSCR loan can be straightforward — especially if you have 12 months of booking history. Common reasons to refinance include pulling equity out to purchase another property, lowering your interest rate, or moving from a conventional loan that required you to qualify on personal income.

Your actual platform history and bank statements make the income documentation piece simple. The property's track record speaks for itself.

The 20% Expense Factor Explained

Lenders don't use your gross rent number directly. They apply a 20% expense factor to account for the real costs of running a short-term rental:

Platform fees — Airbnb and VRBO charge 3–15% of each booking
Cleaning and turnover costs — professional cleaning between guests
Furnishing and maintenance — STR properties require more upkeep than long-term rentals
Vacancy — seasonal gaps and booking fluctuations

This 20% haircut is standard across most DSCR lenders for short-term rental properties. Long-term rentals typically don't have this adjustment.

Next Steps

Whether you're buying your first Airbnb property or refinancing an existing one, the process starts with understanding the numbers. Check current non-QM rates to see where DSCR pricing stands today.

Ready to talk specifics? Contact us or book a call to run the numbers on a property you're considering.

View Today's Rates →

Sources

theLender (Hometown Equity Mortgage) theNONI Product Matrix
AIRDNA Rentalizer documentation

This information is provided for educational purposes and does not constitute financial advice. DSCR loan programs, requirements, and pricing vary by lender and are subject to change. Investment property loans carry different terms and risks than primary residence financing. Rental income projections are not guaranteed. Contact a licensed loan officer to discuss your specific situation. NetRate Mortgage LLC NMLS #1111861. Equal Housing Lender.