DSCR for Short-Term Rentals (Airbnb)

Can You Use DSCR Loans for Short-Term Rentals?

Yes, many DSCR lenders finance short-term rental properties including Airbnb and VRBO listings. However, the underwriting process differs from traditional long-term rental DSCR loans because short-term rental income is less predictable.

Lenders may use different income documentation methods and apply more conservative assumptions when calculating DSCR for STR properties.

How Lenders Calculate DSCR for Airbnb Properties

For short-term rentals, lenders typically use one of these approaches to determine income:

1. AirDNA or similar market data: Lenders pull projected revenue data from platforms that track short-term rental performance in the property’s market.

2. 12-month booking history: If you already operate the property as an STR, lenders may use your actual trailing 12-month revenue.

3. 1007 rent schedule with STR adjustment: Some lenders use a standard appraisal rent estimate and apply an STR premium based on market data.

Most lenders apply a discount of 10-25% to projected STR income to account for seasonality and vacancy.

Example: Airbnb DSCR Calculation

A beachfront condo generates $4,500/month average on Airbnb. The lender applies a 20% discount: $4,500 x 0.80 = $3,600 adjusted income.

Monthly expenses (HOA, insurance, taxes, management): $1,200. NOI = $2,400/month.

Monthly mortgage payment: $2,000. DSCR = $2,400 / $2,000 = 1.20.

This qualifies with most STR-friendly DSCR lenders.

Key Differences for STR DSCR Loans

Expect slightly higher rates (0.25-0.50% premium over long-term rental DSCR loans), minimum 25% down payment for most STR programs, and a requirement that the property be in an STR-friendly municipality.