Short-term rental (STR) investing has exploded in the past decade. But getting a loan for an Airbnb or VRBO property? That’s where most investors hit a wall. Banks treat STRs as high-risk, variable-income properties — and most won’t lend on them at all. Here’s what actually works.
The Problem with Conventional STR Financing
Fannie Mae and Freddie Mac guidelines don’t recognize short-term rental income as qualifying income. Even if your Airbnb earns $4,000/month, a conventional lender can’t count that toward your DTI the same way long-term rent is counted. The result: many profitable STR investors can’t qualify for conventional financing despite strong cash flow.
STR-Friendly Loan Programs
DSCR Loans Using STR Income
Some DSCR lenders will use actual Airbnb/VRBO rental history to calculate qualifying income. Instead of using a standard long-term rent estimate, they use a short-term rental income schedule — either from a property management company, AirDNA data, or your actual hosting income history.
- 12 months of STR income history preferred (some accept 6 months)
- Market STR analysis accepted if no history available
- Same DSCR calculation: Monthly STR income ÷ Monthly PITIA
- Up to 80% LTV on purchase, 75% on cash-out
Vacation Home Equity Loans (Cash-Out)
If you already own an STR property with equity, you can access that equity without selling. We offer vacation home equity loans that use the property’s rental income (short-term or long-term) to qualify.
Hard Money Loans (For Speed or Distressed STRs)
If you need to move fast on a desirable vacation rental or the property needs work, a hard money loan can close in 5–10 days based purely on the property’s value. No income documentation whatsoever. Use it to acquire, then refinance into a long-term STR-DSCR loan once the property is performing.
What Lenders Look for in STR Properties
- Location: Established vacation/tourist markets (beach, mountains, urban) get better terms than untested markets
- Occupancy rate: Annual occupancy of 65%+ is typical for strong qualification
- Income documentation: Airbnb/VRBO payout statements, bank deposits, or AirDNA/Mashvisor market analysis
- Property type: SFR and condo (warrantable) most eligible; some HOAs restrict STR — verify before applying
- HOA restrictions: Some condo HOAs ban short-term rentals — a lender won’t lend on an STR property in an HOA that prohibits it
LLC vs. Personal Name for STR Loans
You can hold an STR property in either a personal name or an LLC. DSCR lenders lend to both. Many STR investors prefer LLCs for liability protection, especially when guests are regularly on the property. Personal guarantee is typically required either way.
Financing an Airbnb or vacation rental? See our vacation home equity programs, or get a free quote and tell us your property location and current rental history.