What Is a DSCR Loan for Short-Term Rentals and How Does It Work?
A DSCR loan for short-term rentals is a non-QM mortgage product designed specifically for investors who operate or plan to operate properties on platforms like Airbnb, VRBO, Booking.com, and other vacation rental marketplaces. The loan qualification is based entirely on the property's short-term rental income potential rather than the borrower's personal income, W-2s, or tax returns.
The fundamental mechanics mirror traditional DSCR lending: the property's gross rental income is divided by the total monthly mortgage payment (PITIA) to produce a debt service coverage ratio. The critical difference lies in how rental income is determined. Instead of using a signed long-term lease or the appraiser's 1007 rent schedule, STR DSCR lenders accept income data from short-term rental analytics platforms like AirDNA, actual booking history from Airbnb and VRBO host accounts, or a combination of both.
The STR DSCR lending market has expanded significantly since 2023. According to industry estimates, vacation rental properties financed through DSCR programs grew by over 40% between 2024 and 2025, driven by investor demand and the maturation of income verification tools like AirDNA. By 2026, STR-specific DSCR programs are available from dozens of wholesale lenders, creating competitive pricing that benefits borrowers who shop through wholesale broker channels.
STR DSCR Formula
DSCR = Monthly STR Gross Income ÷ Monthly PITIA
STR Gross Income = Projected or actual monthly revenue from Airbnb, VRBO, or comparable platforms (annualized and divided by 12)
PITIA = Principal + Interest + Taxes + Insurance + Association dues (HOA)
Strong STR DSCR: 1.25+
$6,500 STR income ÷ $5,000 PITIA = 1.30
Best rates; maximum LTV options
Standard: DSCR 1.0-1.24
$5,200 STR income ÷ $5,000 PITIA = 1.04
Qualifies with standard pricing
Below Breakeven: <1.0
$4,200 STR income ÷ $5,000 PITIA = 0.84
Select lenders; higher down payment
Short-Term Rental DSCR vs Long-Term Rental DSCR: Key Differences
While both STR and LTR DSCR loans share the same fundamental structure — qualifying based on property income rather than borrower income — the programs differ in several important ways. Understanding these differences helps investors choose the right DSCR program and set accurate expectations for approval timelines, documentation requirements, and pricing.
| Feature | STR DSCR Loan | Long-Term Rental DSCR Loan |
|---|---|---|
| Income Source | Airbnb/VRBO revenue or AirDNA projections | Signed lease or 1007 rent schedule |
| Income Verification | AirDNA report, booking history, or P&L | Lease agreement or appraisal rent schedule |
| Operating History Required | 0-24 months (varies by lender) | None (vacant properties qualify) |
| Typical Min. DSCR | 1.0 (some lenders allow 0.75) | 1.0 (some lenders allow 0.75) |
| Typical Min. Down Payment | 20-25% | 20-25% |
| Max LTV (Purchase) | 75-80% | 75-80% |
| Reserve Requirements | 6-12 months (often higher) | 6-12 months |
| Interest Rate Premium | Slight premium over LTR DSCR | Standard DSCR pricing |
| Lender Availability | Growing but fewer lenders than LTR | Widely available (200+ lenders) |
| Local Regulation Review | Required (STR permit verification) | Not typically required |
| Income Volatility Risk | Higher (seasonal, market-dependent) | Lower (stable lease income) |
| Best For | Vacation markets, high-revenue STR properties | Stable rental markets, long-term hold strategy |
Note: Rates, terms, and qualification requirements vary by lender. Rental income projections are estimates and actual income may vary. Contact a licensed loan officer for current program details.
How Do Lenders Calculate Short-Term Rental Income for DSCR Loans?
The income calculation method is the single most important variable in STR DSCR lending. Different lenders accept different types of income documentation, and the method used directly affects the DSCR ratio and whether the property qualifies. Understanding all three primary methods helps investors choose the right lender and prepare the correct documentation.
STR Income Calculation Methods Compared
| Method | Data Source | History Required | Best For | Lender Discount Factor |
|---|---|---|---|---|
| AirDNA Projections | AirDNA market analytics report for the specific address | None | New purchases, conversions from LTR | 75-90% of projected income |
| Actual Booking History | 12-24 months of Airbnb/VRBO host earnings data | 12-24 months | Existing STR operators refinancing | 90-100% of actual income |
| Hybrid (Projection + History) | AirDNA plus partial booking history | 3-12 months | Newer STR operators with some track record | 80-90% of blended figure |
| CPA-Prepared P&L | Profit and loss statement from certified accountant | 12+ months | Multi-platform operators, direct bookings | 85-100% of documented income |
Income calculation methods and discount factors vary by lender. Rental income projections are estimates and actual income may vary based on market conditions, seasonality, and occupancy rates.
AirDNA: The Industry Standard for STR Income Projections
AirDNA has become the dominant data source for STR DSCR lending. The platform analyzes millions of short-term rental listings across Airbnb and VRBO to generate property-specific revenue projections based on:
- • Comparable property performance — revenue from similar properties within the same market
- • Seasonal demand patterns — monthly occupancy rates and average daily rates throughout the year
- • Property characteristics — bedrooms, bathrooms, amenities, and location quality
- • Market saturation — supply and demand dynamics for STRs in the specific area
Most lenders that accept AirDNA data apply a discount factor (typically 75-90%) to the projected annual revenue as a conservative buffer. This means a property projected to earn $80,000 annually by AirDNA is typically calculated at $60,000-$72,000 for DSCR purposes.
Which Property Types Qualify for Short-Term Rental DSCR Loans?
Not all property types perform equally in the short-term rental market, and lender requirements reflect this reality. The best STR DSCR candidates are properties in vacation-friendly locations with features that appeal to travelers. Here is what qualifies and what investors should consider for each type.
Single-Family Residences (SFRs)
The most popular STR property type for DSCR financing. Detached homes with 2-5 bedrooms in vacation markets, beach communities, mountain towns, and urban tourism areas consistently generate strong STR income. SFRs offer the widest lender availability for STR DSCR programs.
Condominiums and Townhomes
Condos in resort areas, beach towns, and ski destinations are strong STR performers. The critical requirement is that the HOA must allow short-term rentals. Lenders verify HOA rules before approving STR DSCR financing for condos. HOA dues are included in PITIA, which can reduce the DSCR ratio.
2-4 Unit Properties
Multi-unit properties operated as STRs generate higher total revenue. Some investors operate one unit as their primary residence while listing the remaining units on Airbnb. Each unit's STR income is aggregated for the total DSCR calculation, often producing ratios above 1.50.
Cabins, Lake Houses, and Unique Properties
Properties with unique appeal — mountain cabins, lakefront homes, A-frames, and architectural standouts — often command premium nightly rates on STR platforms. Select DSCR lenders finance these property types, though appraisal requirements may be more stringent. AirDNA data is especially useful for valuing unique property income.
Properties in STR-Restricted Areas
Properties located in cities or counties that prohibit or severely restrict short-term rentals are generally not eligible for STR DSCR financing. Lenders verify local STR regulations as part of underwriting. If STR operations are restricted, the property may still qualify for a standard long-term rental DSCR loan using lease income or market rent.
8 Steps to Getting a DSCR Loan for Your Airbnb or VRBO Property
The STR DSCR loan process follows a structured path from market research through closing. Each step builds on the previous one, and understanding the full process helps investors avoid delays and prepare the right documentation from the start.
- 1Research local STR regulations — verify the target city or county allows short-term rentals and identify any permit, licensing, or zoning requirements before committing to a property
- 2Run AirDNA projections — obtain a revenue projection report for the target property address to estimate annual STR income and calculate a preliminary DSCR ratio
- 3Contact a wholesale mortgage broker — share the AirDNA data, property details, and your investor profile so the broker can match you with STR-friendly DSCR lenders
- 4Get pre-qualified — provide basic documentation (credit report authorization, entity documents if applicable, asset statements for reserves) to receive a pre-qualification letter
- 5Submit the full application — once under contract, submit the complete loan application with purchase agreement, property details, and any booking history documentation
- 6Appraisal and AirDNA verification — the lender orders an appraisal and reviews the AirDNA report or booking history to confirm the property's income potential supports the target DSCR
- 7Underwriting review — underwriters verify credit, reserves, property eligibility, STR regulation compliance, and DSCR ratio before issuing final approval
- 8Closing and funding — sign final loan documents, complete funding, and take ownership of the property to begin your STR operation
How Does Seasonal Income Affect DSCR Qualification for Vacation Rentals?
Seasonality is one of the most misunderstood aspects of STR DSCR lending. Investors often worry that weak off-season months will disqualify their properties, but lenders evaluate STR income on an annualized basis. This means strong peak-season revenue offsets slower months, and the DSCR is calculated using the average monthly income across the full year.
For example, a beach house that generates $12,000 per month during summer (June-August) and $3,000 per month during winter (December-February) produces an annualized monthly average of approximately $6,500. Lenders use this $6,500 figure — not the $3,000 winter low — to calculate the DSCR ratio. Properties in markets with strong peak seasons often produce excellent annual DSCR ratios despite significant monthly variation.
AirDNA projections automatically account for seasonal patterns, providing month-by-month revenue estimates based on historical performance of comparable properties in the market. When lenders require actual booking history, they insist on a minimum 12-month period specifically to capture the complete seasonal cycle. Partial-year history that only covers peak months is generally not accepted.
5 Strategies to Maximize STR DSCR Ratios
- 1Target year-round demand markets — coastal cities, urban tourism hubs, and college towns generate more consistent monthly income than single-season destinations
- 2Optimize listing quality — professional photography, detailed descriptions, and competitive pricing boost occupancy rates and average daily rates across all seasons
- 3Offer mid-term rental during off-season — 30+ day stays during slow months at reduced rates still generate income that improves the annualized DSCR
- 4Add amenities that command premium pricing — hot tubs, pools, game rooms, and outdoor entertaining spaces increase nightly rates and occupancy
- 5Use dynamic pricing tools — platforms like PriceLabs and Beyond Pricing automatically adjust nightly rates based on demand, events, and competitor pricing to maximize revenue
California and Washington Short-Term Rental Regulations: Impact on DSCR Lending
Local STR regulations directly impact DSCR loan eligibility because lenders verify that short-term rental operations are legally permitted at the property's location. Both California and Washington have a patchwork of city-level regulations that range from permissive to highly restrictive. Investors must research local rules before pursuing STR DSCR financing.
California STR Regulatory Landscape
California has no statewide STR ban, leaving regulation to individual cities and counties. The regulatory environment varies dramatically across the state. Cities like Palm Springs, Big Bear, and many beach communities have established permitting systems that allow STR operations with proper licensing. Other cities like Santa Monica and Beverly Hills have enacted strict limitations that effectively prohibit most short-term rentals.
For DSCR lending purposes, properties in California cities with clear STR permit processes are generally eligible for STR DSCR programs. Lenders typically require proof of an active STR permit or confirmation that the property is in a jurisdiction where STR operations are permitted. Properties in cities with STR bans or moratoriums are not eligible for STR-based DSCR qualification but may qualify under standard long-term rental DSCR programs.
Washington State STR Regulatory Landscape
Washington State requires all short-term rental operators to register with the Department of Revenue and collect applicable lodging taxes. Beyond state requirements, cities set their own STR rules. Seattle allows STR operations with a short-term rental operator license. Cities like Leavenworth, Chelan, and many San Juan Island communities have established permitting systems for vacation rentals. Some cities have implemented caps on STR permits or geographic restrictions.
DSCR lenders financing Washington STR properties verify local compliance as part of the underwriting process. Properties in established vacation markets with clear permitting pathways represent the strongest candidates for STR DSCR financing. Investors should obtain or confirm eligibility for an STR permit before submitting a DSCR loan application.
Important: Verify STR Regulations Before Financing
- • Regulations change frequently — city councils regularly update STR ordinances, so confirm current rules directly with the local planning or zoning department
- • HOA restrictions apply independently — even if the city allows STRs, the property's HOA may prohibit or restrict short-term rental use
- • Lenders verify compliance — expect underwriters to confirm that STR operations are legally permitted at the property's specific address
- • Permit requirements vary — some cities require business licenses, transient occupancy tax registration, safety inspections, or insurance minimums
- • Consult local counsel — for complex regulatory situations, consult with a local real estate attorney familiar with STR ordinances in the target market
Why Wholesale Broker Access Matters for Short-Term Rental DSCR Loans
The wholesale mortgage broker advantage is amplified for STR DSCR loans because the variation between lender programs is even greater than standard DSCR lending. Not all DSCR lenders accept short-term rental income. Among those that do, the differences in income calculation methods, discount factors, operating history requirements, and geographic restrictions create a complex landscape that a single retail lender cannot navigate.
Mo Abdel at Lumin Lending accesses STR DSCR programs from 200+ wholesale lenders simultaneously, identifying the specific programs that match each investor's scenario. One lender accepts AirDNA projections with no operating history; another requires 12 months of booking data but offers better pricing. One lender allows 80% LTV on STR purchases; another caps at 75% but accepts lower DSCR ratios. Wholesale access means finding the intersection of the best rate, terms, and qualification flexibility for each unique deal.
6 Reasons STR Investors Choose a Wholesale Broker for DSCR Financing
- 1Access to STR-specific DSCR programs — not all DSCR lenders offer STR products; a wholesale broker knows which lenders have active STR programs
- 2Income method matching — a broker can match investors with lenders that accept their specific income documentation (AirDNA only, booking history, or hybrid)
- 3Rate shopping across STR lenders — the rate spread between STR DSCR lenders can exceed the spread in standard DSCR, making comparison shopping even more valuable
- 4Geographic expertise — an experienced broker knows which lenders are active in specific California and Washington vacation markets and which avoid certain jurisdictions
- 5Regulatory navigation — a broker familiar with STR regulations can identify potential underwriting issues before they cause delays or denials
- 6Portfolio scaling — investors building STR portfolios benefit from a broker who can distribute loans across multiple lenders to avoid concentration limits
STR-Specific DSCR Loan Requirements: What Lenders Look For
Beyond the standard DSCR loan requirements (credit score, down payment, reserves), short-term rental DSCR programs add several STR-specific conditions. Meeting these requirements in advance streamlines the approval process and prevents last-minute surprises during underwriting.
STR Permit or License
Many lenders require proof that the property has an active STR permit, business license, or transient occupancy tax registration from the local jurisdiction. For new purchases, some lenders accept proof of permit eligibility (confirmation that the jurisdiction allows STRs) with a condition to obtain the permit before closing or within 30 days post-closing.
STR Insurance (Landlord or Commercial)
Standard homeowner's insurance policies do not cover short-term rental activity. Lenders require an insurance policy that specifically covers STR operations, which may be a landlord policy with an STR endorsement or a commercial short-term rental policy. Insurance premiums for STR properties are typically higher than standard landlord policies.
Enhanced Reserve Requirements
Some STR DSCR lenders require higher reserves than standard long-term rental programs. While LTR DSCR loans typically require 6 months of PITIA reserves, STR programs may require 9-12 months. The higher reserve requirement reflects the variable nature of short-term rental income and the potential for seasonal income gaps.
Property Condition Standards
Lenders expect STR properties to be in move-in-ready, guest-quality condition. Properties requiring significant renovation may not qualify until improvements are completed. The appraisal evaluates the property's condition relative to its intended use as a short-term rental, and deferred maintenance can impact both the appraised value and loan approval.
STR Investment Strategies Using DSCR Financing in California and Washington
DSCR loans unlock multiple short-term rental investment strategies across California and Washington markets. Each strategy leverages the unique advantage of DSCR financing — qualification based on property income rather than personal income — to build and scale a vacation rental portfolio.
California Beach Market Strategy
Coastal California markets like Big Bear, Palm Springs, Joshua Tree, and Temecula wine country offer strong STR demand driven by domestic tourism and proximity to major metro areas. DSCR financing allows investors to acquire properties in these high-value markets without the income documentation requirements that conventional loans demand for million-dollar-plus properties.
Rental income projections are estimates.
Washington Mountain and Island Strategy
Washington's vacation markets — Leavenworth, the San Juan Islands, Chelan, and areas surrounding Mount Rainier — attract year-round tourism. DSCR loans allow investors to finance properties in these premium markets using projected STR income from AirDNA or actual booking history from existing listings. Seasonal demand patterns in Washington create opportunities for strong annualized DSCR ratios.
Rental income projections are estimates.
Urban STR Strategy
Urban condos and townhomes in cities like San Diego, Sacramento, and Tacoma serve business travelers, event attendees, and tourists year-round. These properties typically produce more consistent monthly income than seasonal vacation markets, which can result in higher annualized DSCR ratios despite lower peak-season rates. Verify local STR regulations before investing.
Rental income projections are estimates.
LTR-to-STR Conversion Strategy
Investors with existing long-term rental properties in markets with strong STR demand can convert to short-term rental operations and cash-out refinance using an STR DSCR loan. The higher STR income often produces a better DSCR ratio than the previous long-term lease, potentially allowing the investor to extract equity while maintaining or improving the coverage ratio.
Rental income projections are estimates.
Top STR Markets in California and Washington for DSCR Financing
Not all short-term rental markets perform equally. Some California and Washington destinations command premium nightly rates, maintain year-round occupancy, and generate strong annualized revenue that translates to excellent DSCR ratios. Understanding which markets support the strongest STR income helps investors target properties where DSCR qualification is easiest.
The strongest STR markets share common characteristics: tourism infrastructure, peak-season demand that drives rates above $150-$250 per night, and consistent off-season demand that prevents income collapse. Coastal California markets like Big Bear and Palm Springs lead in revenue potential, while Washington mountain and island destinations provide geographic diversification and year-round booking potential.
| Market Location | Avg Nightly Rate | Annual Occupancy % | Est. Annual Revenue* | Typical DSCR Range |
|---|---|---|---|---|
| Big Bear, CA | $185-$220 | 72-78% | $48,000-$62,000 | 1.15-1.35 |
| Palm Springs, CA | $195-$240 | 75-82% | $53,000-$71,000 | 1.20-1.45 |
| Lake Tahoe, CA/NV | $210-$260 | 70-76% | $53,000-$72,000 | 1.18-1.40 |
| Oceanside, CA | $155-$195 | 68-75% | $38,000-$53,000 | 0.95-1.25 |
| San Diego, CA | $140-$180 | 72-80% | $37,000-$52,000 | 0.90-1.20 |
| Leavenworth, WA | $160-$210 | 65-72% | $38,000-$55,000 | 0.95-1.30 |
| San Juan Islands, WA | $175-$240 | 60-68% | $38,000-$59,000 | 0.90-1.35 |
*Annual revenue estimates based on 3-bedroom properties with average amenities. Actual performance varies by property condition, location within market, amenities, management quality, and platform optimization. Data sourced from AirDNA market reports and industry benchmarks. DSCR calculations assume typical PITIA of $5,000-$6,500 monthly. Rental income projections are estimates and actual income may vary.
These markets represent the strongest STR income potential for DSCR qualification. Properties in Big Bear and Palm Springs consistently produce DSCR ratios above 1.20, making qualification straightforward with most lenders. Even secondary markets like Oceanside and Leavenworth provide viable DSCR candidacy when properties are well-maintained and properly priced.
STR Management Costs and Cash Flow Impact on DSCR Qualification
While DSCR loan qualification is based on gross rental income (operating expenses do not reduce the qualifying income), understanding STR operating costs is critical for evaluating actual cash flow and profitability. The gap between gross revenue and net operating income determines whether an STR investment produces positive cash flow after all expenses are covered.
STR properties carry substantially higher operating costs than long-term rentals. The intensive guest management, cleaning between stays, platform fees, and premium insurance required for short-term rental operations eat into gross revenue. Savvy STR investors budget for these expenses upfront and ensure that the projected gross income still produces positive net cash flow after expenses are deducted.
| Operating Expense Category | Typical % of Revenue | Dollar Range (Annual) | Impact on Net Cash Flow |
|---|---|---|---|
| Professional Property Management | 8-12% | $4,000-$7,000 | Major impact |
| Cleaning & Turnover | 10-15% | $5,000-$9,000 | Major impact |
| Platform Fees (Airbnb 3%, VRBO 15%) | 6-16% | $3,000-$10,000 | Major impact |
| STR Insurance Premium | 3-6% | $1,500-$4,000 | Moderate impact |
| Supplies & Consumables | 3-5% | $1,500-$3,000 | Moderate impact |
| Maintenance & Repairs | 5-8% | $2,500-$5,000 | Moderate impact |
| Utilities (Higher than LTR) | 4-7% | $2,000-$4,000 | Moderate impact |
| Total Operating Costs | 39-59% | $19,500-$42,000 | Critical evaluation |
Operating expense percentages are industry averages and vary significantly based on property location, property condition, guest volume, management approach, and platform choice. Self-managed properties have lower management costs but higher time investment. Cleaning frequency depends on booking volume and property size.
The critical insight: A property qualifying for a DSCR loan with $60,000 annual gross revenue may only produce $24,000-$36,600 in net operating income after expenses. This net figure, not the gross qualifying income, determines true profitability. Investors should model operating costs carefully and ensure sufficient reserves to cover months when occupancy is lower than projected. This is why lenders require 9-12 months of reserves for STR properties — the cash flow can be volatile due to high operating costs and seasonal variation.
DSCR Requirements by STR Lender Tier: Pricing and Terms Comparison
Not all STR DSCR lenders have identical requirements. The wholesale lending market segments into three distinct tiers: Prime lenders with the most restrictive requirements but the lowest rates, Standard tier lenders offering balanced terms, and Flexible lenders accepting weaker ratios but charging higher rates. Understanding this tier structure helps investors identify which lenders match their scenario and what compensating factors strengthen an application.
Tier 1 Prime lenders dominate the market and offer the most competitive pricing, but require strong DSCR ratios (1.25+), high credit scores (740+), and substantial reserves. Tier 2 Standard lenders serve the broader market with moderate requirements and rates. Tier 3 Flexible lenders will approve properties with marginal DSCR ratios (0.75-0.99) but compensate with higher interest rates, larger down payments, or additional reserve requirements. A wholesale broker compares across all tiers to find the best risk-adjusted solution.
| Qualification Metric | Tier 1 Prime Lenders | Tier 2 Standard Lenders | Tier 3 Flexible Lenders |
|---|---|---|---|
| Minimum DSCR | 1.25 | 1.0 | 0.75 |
| Minimum Credit Score | 740+ | 680-720 | 660-680 |
| Max LTV (Purchase) | 75-80% | 75-80% | 70-75% |
| Interest Rate (APR) | 5.75%-6.25% | 6.25%-7.25% | 7.25%-8.75% |
| Reserve Requirement | 6 months PITIA | 9 months PITIA | 12 months PITIA |
| Operating History Required | None (AirDNA accepted) | 0-12 months | 12-24 months |
| Min. Down Payment | 20-25% | 20-25% | 25-30% |
| Points/Origination | 0.75-1.5% | 1.5-2.5% | 2.5-3.5% |
| Best For | Strong STR properties, premium markets | Most STR investors, balanced terms | Below-1.0 DSCR, marginal approval |
Interest rates, points, and terms reflect market conditions as of February 2026 and vary by individual lender, loan structure, and market conditions. These are representative ranges based on typical wholesale pricing. Actual rates depend on credit score, down payment, property location, STR market strength, and reserve coverage. Contact a licensed loan officer for current pricing.
The tier structure illustrates the critical trade-off in STR DSCR financing: Prime tier lenders deliver the best rates but require the strongest credit and DSCR ratios. Flexible tier lenders will approve marginal deals but charge substantially more for the risk. A wholesale broker's advantage lies in simultaneously evaluating all three tiers and identifying whether a property qualifies at Tier 1 with a best rate, or whether Tier 2 or Tier 3 represents the optimal solution. For a property with a 1.10 DSCR, Tier 2 Standard lenders likely offer better pricing than Tier 3 Flexible lenders, while a property at 0.85 DSCR has no choice but Tier 3 or a standard long-term rental DSCR program.
People Also Ask About DSCR Loans for Short-Term Rentals
Do all DSCR lenders accept Airbnb income for qualification?
No, not all DSCR lenders accept short-term rental income; only lenders with dedicated STR programs underwrite Airbnb and VRBO revenue. This is why wholesale broker access is critical for STR investors. A broker identifies the specific lenders offering STR DSCR programs and matches investors with the best options for their scenario.
Can I use my Airbnb Superhost earnings to qualify for a DSCR loan?
Yes, documented Airbnb host earnings from the past 12-24 months serve as qualifying income with lenders that accept actual booking history. Download your earnings reports directly from the Airbnb host dashboard and provide them to your broker. Superhost status may also be viewed favorably by underwriters as evidence of successful STR management experience.
What happens if my city bans short-term rentals after I close the loan?
A post-closing STR ban does not trigger loan default; your mortgage terms remain unchanged regardless of local regulatory changes. However, losing STR income means you would need to convert to a long-term rental or cover the mortgage from other sources. This regulatory risk is one reason lenders require reserves for STR DSCR loans.
Is there a minimum number of nights required for STR income to count?
Most lenders define short-term rental as stays under 30 days, but there is no minimum night requirement for the income to qualify. Whether your property books one-night stays or week-long vacations, the total annualized revenue from all bookings is used to calculate the DSCR ratio. Some cities impose minimum-night requirements as part of their STR regulations.
Can I finance multiple Airbnb properties with DSCR loans simultaneously?
Yes, there is no limit on the number of STR properties you can finance with DSCR loans; each property qualifies independently based on its own income. Portfolio investors often distribute STR DSCR loans across multiple lenders to avoid concentration limits that individual lenders may impose. A wholesale broker manages this distribution strategy across the lender network.
Do STR DSCR loans require the property to be furnished?
Most STR DSCR lenders do not require the property to be furnished at closing, but the property must be in guest-ready condition for STR operation. Furnishing costs can be substantial for vacation rentals. Some investors include furnishing estimates in their overall investment budget alongside the down payment and closing costs.
How does occupancy rate affect STR DSCR calculations?
Occupancy rate is embedded in the AirDNA revenue projection, which accounts for typical vacancy based on comparable STR performance in the market. Higher occupancy produces higher gross income and a stronger DSCR ratio. AirDNA projections typically reflect realistic occupancy rates rather than 100% booking assumptions, providing lenders with conservative income estimates.
Can I use a property manager and still qualify for an STR DSCR loan?
Yes, using a professional property manager does not affect DSCR loan qualification because the gross rental income is used before management fee deductions. DSCR calculations use gross revenue, not net income after expenses. Management fees, cleaning costs, and other operating expenses are not subtracted from the income figure used in the DSCR formula.
Frequently Asked Questions: DSCR Loans for Airbnb & Short-Term Rentals
Can I get a DSCR loan for an Airbnb or VRBO property?
Yes. Many DSCR lenders offer dedicated short-term rental programs in 2026 that accept Airbnb, VRBO, and other vacation rental income for qualification. The property's projected or actual short-term rental revenue is used to calculate the DSCR ratio instead of traditional long-term lease income. Not all DSCR lenders accept STR income, so working with a wholesale broker who knows which lenders offer STR-specific programs is critical.
How do lenders calculate income for a short-term rental DSCR loan?
Lenders use one of three primary methods: AirDNA market projections based on comparable STR properties in the area, actual booking history from the past 12-24 months pulled from Airbnb or VRBO host dashboards, or a hybrid approach that blends projections with actual history. Some lenders apply a 75-90% factor to projected income as a conservative buffer. The specific method accepted varies by lender.
Do I need STR operating history to qualify for a DSCR loan?
Not always. Some lenders allow qualification using AirDNA market projections alone, meaning you can purchase a property and finance it as a short-term rental without any prior STR operating history. Other lenders require 12-24 months of documented booking history. A wholesale broker can identify lenders that match your specific situation, whether you have operating history or not.
What DSCR ratio do lenders require for short-term rentals?
Most lenders require a minimum DSCR of 1.0 for short-term rental properties, though some accept ratios as low as 0.75 with compensating factors like higher credit scores or larger down payments. STR lenders often require higher DSCR minimums than long-term rental programs because of income volatility. A DSCR of 1.25 or higher qualifies for the best rates.
Are DSCR loan rates higher for short-term rentals than long-term rentals?
Generally yes. DSCR loan rates for short-term rental properties carry a small premium compared to long-term rental DSCR programs, typically reflected as a pricing adjustment rather than a dramatically different rate. The premium accounts for the perceived higher risk of seasonal and variable income. Wholesale broker access helps minimize this premium by comparing STR-specific pricing across 200+ lenders.
What down payment is required for a short-term rental DSCR loan?
Short-term rental DSCR loans typically require 20-25% down payment on purchase transactions. Some lenders require 25% minimum for STR properties regardless of DSCR ratio, while others allow 20% down with strong DSCR ratios (1.25+) and credit scores (720+). Cash-out refinances on STR properties typically allow up to 70-75% LTV.
Can I hold an Airbnb property in an LLC with a DSCR loan?
Yes. DSCR loans allow LLC, corporation, and trust vesting for short-term rental properties, just like long-term rental DSCR programs. Entity vesting provides liability protection, which is especially important for STR investors who host guests on their properties. There is no restriction on the type of entity used for DSCR loan vesting.
Do local STR regulations affect my ability to get a DSCR loan?
Yes. Lenders evaluate whether the property is located in a jurisdiction that permits short-term rentals. If the city or county prohibits or heavily restricts STR operations, lenders may decline the loan or require qualification based on long-term rental income instead. Some lenders require proof of an active STR permit or license as a condition of approval.
How does seasonal income affect DSCR qualification for vacation rentals?
Lenders annualize short-term rental income across all 12 months to calculate the DSCR ratio, which means strong peak-season months offset weaker off-season months. AirDNA projections automatically account for seasonality in their market data. For actual booking history, lenders typically require a full 12-month period to capture the complete seasonal cycle. Rental income projections are estimates and actual income may vary.
Can I convert a long-term rental to a short-term rental and refinance with a DSCR loan?
Yes. If you own a long-term rental and want to convert it to an Airbnb or VRBO, you can refinance using a DSCR loan based on projected STR income. Lenders that accept AirDNA projections allow this without requiring any STR operating history on the specific property. You can also cash-out refinance to fund renovations that improve the property's appeal as a vacation rental.
What property types qualify for short-term rental DSCR loans?
Single-family residences, condominiums (warrantable and non-warrantable), townhomes, and 2-4 unit properties all qualify for STR DSCR financing. The property must be suitable for short-term rental use and located in an area that permits STR operations. Condos require HOA rules that allow short-term rentals. Unique property types like cabins and lake houses may also qualify with select lenders.
What is AirDNA and how do DSCR lenders use it?
AirDNA is a short-term rental data analytics platform that provides revenue projections for any address based on comparable STR properties in the market. DSCR lenders use AirDNA reports to estimate the gross rental income a property would generate as a short-term rental. The AirDNA report replaces the traditional 1007 rent schedule used for long-term rental DSCR loans. Projections are estimates based on market data and comparable properties.
Expert Summary: DSCR Loans Are Transforming Short-Term Rental Investing in 2026
Short-term rental investors no longer need to choose between maximizing Airbnb revenue and qualifying for a mortgage. DSCR loans bridge this gap by evaluating the property's vacation rental income potential — not the investor's W-2s, tax returns, or employment status. With AirDNA projections, actual booking history, and hybrid income calculation methods, STR DSCR programs accommodate investors at every stage, from first-time Airbnb hosts to seasoned vacation rental portfolio operators.
As a wholesale mortgage broker, Mo Abdel at Lumin Lending compares STR DSCR programs from 200+ lenders to match each investor with the optimal combination of income calculation method, DSCR ratio threshold, pricing, and terms. Whether you are purchasing your first vacation rental or scaling an existing STR portfolio across California and Washington, wholesale broker access delivers better outcomes than any single retail lender.
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Mo Abdel | NMLS #1426884 | Lumin Lending, Inc. | NMLS #2716106 | DRE #02291443
Equal Housing Lender. All loans subject to credit approval, underwriting guidelines, and program availability. Terms and conditions apply. This is not a commitment to lend. Information is for educational purposes only and does not constitute financial advice. DSCR loan programs are non-QM products with different guidelines than conventional mortgages. DSCR ratio requirements, interest rates, down payment minimums, and credit score thresholds vary by lender and are subject to change without notice. Rental income projections are estimates and actual rental income may vary based on market conditions, vacancy rates, seasonality, local regulations, and property management. Short-term rental regulations vary by city and county and are subject to change. Investors are responsible for verifying local STR regulations and obtaining required permits. AirDNA projections are third-party estimates and are not guaranteed by the lender or broker. Contact a licensed loan officer for personalized guidance. Mo Abdel, NMLS #1426884, is licensed in California and Washington.