DSCR loans for short-term rentals (Airbnb and VRBO)

Yes, you can finance an Airbnb or VRBO with a DSCR loan. Lenders count short-term rental income one of three ways: 12 months of actual booking history, a market projection from a tool like AirDNA, or the appraiser's long-term market rent, and they usually cut STR income by roughly 15–30% before running the ratio. Which method your lender uses can swing the same property from a decline to an easy approval.

Short-term rentals are where DSCR loans earn their keep. Conventional underwriting often wants two years of tax returns showing the income, which is a non-starter on a property you have not bought yet. DSCR lenders qualify the property instead. But they are more conservative with STR income than with a 12-month lease, and the details matter.

How do DSCR lenders count Airbnb income?

There are three common methods. Many lenders accept more than one, and some let you use whichever produces the stronger number.

1. Trailing 12-month host history. If the property already operates as an STR, you provide platform payout statements or property management reports covering the last 12 months. Lenders typically use gross booking revenue net of platform fees, then apply a haircut, commonly around 15–20%. This is usually the strongest and most trusted method.
2. Market projection (AirDNA-type report). For a purchase with no operating history, many lenders accept a property-specific projection from a third-party data provider. The haircut is usually bigger, commonly 20–30%, because it is a forecast, not a track record. Some lenders also require the market itself to score above a minimum on that provider's scale.
3. Long-term rent appraisal. The appraiser's long-term market rent (Form 1007 rent schedule) is the fallback. No haircut, but it is usually far lower than what the property earns as an STR. Some lenders only use this method, which is why the same deal can work with one lender and not another.

Whatever method is used, the annual figure is divided by 12 and run through the standard formula: monthly income ÷ PITIA (principal, interest, taxes, insurance, and HOA). Our guide to what DSCR ratio you need explains the thresholds.

What does the haircut do to your ratio?

A lot. This is the part that surprises STR investors most.

Same house, same loan, three very different answers. Before you write an offer, find out which method the lender will use and run the numbers that way, not the way the listing agent ran them.

Do you need a track record or seasoning?

Not always. Many DSCR lenders will finance a brand-new STR purchase on a projection, so you do not need to have run that property before. What the lender wants to see depends on the method:

• Using history: lenders commonly want a full 12 months on the subject property so the number captures every season. A partial year is often annualized conservatively or not accepted.
• Using a projection: no property history needed, but expect the larger haircut and, with some lenders, slightly lower leverage.
• Host experience: some lenders give better terms if you have operated STRs before, on any property. A first-time host can often still qualify, just with less room for error.

If you are refinancing an STR you bought with cash or hard money, seasoning rules for the refinance apply too. Cash-out commonly requires some months of ownership first. See refinancing out of hard money for how that timeline usually works.

How does seasonality affect qualifying?

Lenders typically average the full year. Your July might be enormous and your November thin, but the qualifying number is annual income ÷ 12. That is why a partial-year history is risky: if you have only operated through peak season, the lender cannot see the slow months.

Highly seasonal markets (ski towns, beach towns with short summers) sometimes get extra scrutiny, a bigger haircut, or a higher reserve requirement. Several months of PITIA in reserves is common on STR loans, and more is often required when the ratio is thin or you hold several properties.

Does furnished vs. unfurnished matter?

For the loan amount, mostly no. Furniture is personal property, not real estate, so most DSCR lenders will not finance it and the appraiser generally values the house without it. Plan to pay for furnishing, linens, and setup out of pocket, on top of your down payment and closing costs. On a well-equipped STR that can be a five-figure number.

Where furnishing does matter is the income method. A furnished property already operating as an STR supports the history method. An unfurnished property bought as a future STR will be underwritten on a projection or long-term rent until it has its own track record.

Are condo-hotels and condotels eligible?

Sometimes, with limits. A condo-hotel (a building run like a hotel, often with a front desk, rental pool, or required management program) is usually treated as non-warrantable. Many DSCR lenders will not finance them at all. Those that do commonly cap leverage lower, often around 65–70% LTV on a purchase, and review the building's documents, budget, and rental program closely.

A regular condo in a building that allows short-term rentals is a different animal. It can often be financed like any other DSCR condo, as long as the HOA documents allow nightly rentals and the building passes the lender's condo review.

What kills STR deals in underwriting?

• Local rules. If the city, county, or HOA does not allow short-term rentals at that address, lenders typically will not count STR income. Check permits and HOA rules before you go under contract.
• Weak market data. A projection for a market with thin comparable data may come in low or be rejected outright.
• Insurance. STR coverage costs more than a standard landlord policy. Get a real quote early, because it goes straight into PITIA.
• Thin reserves. STR files often need more reserves than long-term rentals.

DSCR loans are for investment properties only. If you plan to use the place as a vacation home yourself, that is a second-home loan, not a DSCR loan, and it is underwritten differently.

Figures in this article are illustrative. Actual terms depend on the property, rents, credit, reserves, and underwriting.

FAQ

Can I use AirDNA to qualify for a DSCR loan?

Many DSCR lenders accept a property-specific AirDNA-type projection for a purchase with no rental history. Expect a haircut, commonly 20–30%, before the income is used in the ratio.

How much down do I need for an Airbnb DSCR loan?

Commonly 20–25% down on a single-family STR, depending on credit, the ratio, and the lender. Condo-hotels, when eligible, usually require more.

Do I need 12 months of Airbnb history?

Only if you are qualifying on actual history. Many lenders will use a market projection or long-term market rent instead for a property without a track record.

Will a DSCR lender finance the furniture?

Usually not. Furnishings are personal property, so most investors pay for them in cash on top of the down payment and closing costs.

What DSCR do I need for a short-term rental?

Many lenders look for at least 1.0 after the STR haircut, and some want a bit more on STRs. A ratio of 1.20–1.25 or higher typically gets better pricing.