Financing an Airbnb with a traditional loan is notoriously difficult. Thankfully, DSCR lenders love short-term rental (STR) properties provided you meet their specific underwriting requirements.
How Lenders Evaluate Airbnb Income
Because a new Airbnb doesn't have a year-long signed lease, lenders cannot rely on traditional rent rolls. Instead, they use data from platforms like AirDNA or specialized STR appraisers to project the average monthly revenue, accounting for seasonal vacancies.
Typical STR DSCR Requirements
While standard long-term rentals might get approved at a 1.0 ratio, many lenders require a slightly higher minimum DSCR often around 1.15 to 1.25 for short-term rentals to offset the inherent volatility of vacation bookings.
Be Prepared for STR Challenges
Note that not all of the best DSCR lenders accept STRs. Those that do might require you to have prior experience managing an Airbnb or they may slightly constrain your maximum Loan-To-Value (LTV) compared to a single-family long-term rental.