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Short-term rental financing

DSCR loans for Airbnb and short-term rentals

Qualify on what the property earns nightly — not on what you earn. A beach condo that would never cash-flow on a 12-month lease can clear comfortably on short-term rental income, and you don’t need an operating history to buy one. Here’s exactly how lenders count it.

STR LTV up to 75%

Nightly income counts
No operating history needed
46 states + D.C.
Yes, this is a real thing you can do

Short-term rents earn double. Most lenders act like they don't exist.

You already know a beach condo makes more on Airbnb than on a 12-month lease. That’s the whole reason you’re looking at one. The problem has always been financing: a bank runs your income, adds the new payment to your debts, ignores what the property actually earns, and tells you no.
A DSCR loan flips it. The property is the applicant. If the nightly income covers the payment, the deal works — no tax returns, no personal debt-to-income, no explaining yourself. And when nightly income is double the lease, a lot of properties that looked out of reach suddenly aren’t.

Gulf Coast beach condo

~$450,000
Long-term lease
$2,400/mo
Short-term rental
$4,800/mo

2.0× the income

Blue Ridge mountain cabin

~$320,000
Long-term lease
$1,600/mo
Short-term rental
$3,600/mo
2.25× the income

Lake house a few hours from home

~$380,000
Long-term lease
$2,200/mo
Short-term rental
$4,100/mo
1.9× the income
Lenders don’t count every dollar of that. They deduct 20–25% for the real costs of running a short-term rental, which is fair — cleaning and turnover aren’t free. But on that beach condo, even after the deduction, you’re qualifying on $3,840 a month instead of $2,400. That’s still 60% more income than a lease would give you, and it’s usually the difference between a deal that works and one that doesn’t.

You don’t need to already own rentals, and the property doesn’t need a rental history — on a purchase, the appraiser establishes what it can earn.

Property figures are illustrative examples, not quotes or guarantees of rental performance.
The number nobody publishes

Your gross revenue isn't your qualifying income

Short-term rentals cost more to run than long-term ones — cleaning, turnover, furnishings, advertising, platform fees. Lenders account for that with a flat expense factor applied before your ratio is calculated. Almost no guide mentions it, and it’s the single biggest reason investors’ own math doesn’t match the lender’s.

A 20–25% reduction, applied before the DSCR

On a property grossing $4,800/month, here’s what actually reaches the calculation:

Gross monthly revenue

$4,800
12-month average, for seasonality
Expense factor

− 20%

$960 removed
Qualifying income
$3,840
what the ratio uses
The factor is a floor, not a cap. If your documented expenses come in above the standard percentage, the lender uses your actual, higher number instead. Running lean doesn’t help you; running heavy can hurt you.
And when income is documented through a third-party manager, all vendor and management fees are excluded from qualifying income on top of the expense factor.
The full chain

How your nightly income gets to a ratio

Gross revenue, then the lowest documented source, then the expense factor — and only what survives all three gets divided into your payment. Same property throughout: a $450,000 coastal condo at 75% LTV, payment about $3,060/month, long-term market rent $2,400.

Purchase · $450,000 · 75% LTV ($337,500) · ~7.5% illustrative

Qualifies

Appraiser’s short-term rent schedule

$4,800/mo

Long-term market rent (1007)

$2,400/mo
Operating history
None — not required
Expense factor applied
− 20% ($960)
Qualifying income
$3,840/mo
Resulting DSCR
1.25
PITIA about $3,060/mo
On long-term rent alone this property lands at 0.78. Even after a 20% deduction, nightly income is what makes the deal work.
On a purchase, the appraiser’s short-term rent schedule establishes the income and no operating history is required — which is what lets investors buy into a short-term rental market from scratch. The expense factor still comes off before the ratio.
Refinance · twelve-month history came in strong · 75% LTV

Qualifies — but capped

Appraiser’s estimate
$4,800/mo
Your actual 12-month average
$5,400/mo
Rule applied
Lowest documented source
Expense factor applied
− 20% ($960)
Qualifying income
$3,840/mo
Resulting DSCR
1.25
PITIA about $3,060/mo
You earned $600/mo more than the appraiser projected. None of it raises your qualifying income.
When income is documented from more than one source, the lowest figure governs. Outperforming the estimate doesn’t help you borrow more — it just confirms the number you were already going to get, and the expense factor comes off that.
Refinance · soft season, same property · 75% LTV

Falls below the minimum

Appraiser’s estimate
$4,800/mo
Your actual 12-month average
$3,600/mo
Rule applied
Lowest documented source
Expense factor applied
− 20% ($720)
Qualifying income
$2,880/mo
Resulting DSCR
0.94
PITIA about $3,060/mo
Short-term rental programs require 1.00 to 1.15 — the reduced-ratio and no-ratio options available on long-term rentals don’t apply here.
The rule cuts one way. A soft twelve months lowers your qualifying income in full; a strong twelve months is capped at the appraiser’s estimate. Options if this is you: reduce leverage, wait for a stronger trailing year, place the file with a program using a smaller expense factor, or check whether the deal works underwritten as a long-term rental instead.
Illustrative figures at ~7.5% and a 20% expense factor, for the math only; not an offer of credit.
One thing to check first

Make sure the city allows it

Everything above assumes short-term rental is permitted where you’re buying. When it isn’t, the nightly income is disregarded and the property gets underwritten on long-term rent instead — which usually isn’t enough. It’s a five-minute check that saves deals, so do it before you write the offer.

The income has to be legally permitted and common for the area

Two separate tests, both confirmed through the appraisal and the property’s location. Being legal isn’t quite enough on its own — short-term rentals also need to be established and typical for that market, which is rarely a problem in a genuine vacation market and occasionally is in a residential one.
Worth knowing: a booked calendar and two years of payouts won’t override a local ordinance. The rule is checked at underwriting, not at contract.
Step 1
Check the ordinance
City and county rules before you go under contract. Registration requirements, permit caps, and minimum-night rules all matter.
Step 2
Get the condo letter
If it’s a condo, expect to produce an association letter confirming the unit is eligible. Associations often restrict rentals under 30 days even where the city allows them.
Step 3
Send us the address
We’ll tell you whether nightly income will count in that market before you spend a dollar on an appraisal.
Already own one?

Your short-term rental can fund the next one

This is how most investors get from one property to three. The condo appreciates, you build twelve months of booking history, and that history unlocks a refinance — pulling out enough equity to put down on the next one without touching your savings.
And once you have a track record, a door opens that wasn’t available when you bought: your actual performance can now do the qualifying. No more relying solely on an appraiser’s projection.

Cash-out refinance

Up to 70% LTV on short-term rentals
Replace your existing loan with a larger one and take the difference at closing. The proceeds have to be used for business purposes — buying the next property, funding a renovation, paying down business debt. This is the play that compounds a portfolio.

Rate and term refinance

Up to 70–75% LTV on short-term rentals
Change your rate or term without pulling cash out. Common for investors who bought with hard money or a bridge loan to close fast, then refinance into permanent DSCR financing once the property is stabilized and booking.
What it looks like: the beach condo, three years in
Purchased for
$450,000
Appraises today at
$560,000
Remaining loan balance
$327,500
New loan at 70% LTV
$392,000
Resulting DSCR
1.07
Cash out, before costs
$64,500
Roughly a 15% down payment on the next property
Illustrative at ~7.5% with a 20% expense factor and $4,800 gross monthly revenue. Not an offer of credit.

When you refinance matters more than most people realize

On a purchase, an appraiser’s projection sets your income. On a refinance, your trailing twelve months becomes the number — and if it comes in below the appraiser’s estimate, the lower figure is what you qualify on.
Practically, that means a refinance started after a strong season looks very different from one started after a soft one. If you had a weak year, it’s often worth waiting a couple of months for the trailing average to recover rather than locking in your worst twelve months as your qualifying income.
Three things work differently than they did when you bought:
History is required

A full twelve months of documented revenue. A partial season won’t establish the income, so a property you started renting six months ago isn’t ready yet.

Projection data is out
AirDNA and similar forecast reports are accepted on purchases only. Once you own it, your real numbers are the numbers.
Leverage steps down
Cash-out tops out around 70% on short-term rentals, below both the purchase ceiling and what a long-term rental would allow.
One more reason placement matters here: on the example above, a program with a 1.00 minimum lets you take the full $64,500. A program requiring 1.15 caps the same loan around $357,000 — about $29,500 out instead of $64,500. Same property, same performance, $35,000 difference in what reaches your pocket.
What short-term rental costs you

Short-term rental is its own tier — here's the trade

Counting nightly income comes at a price. Every line below is tighter than the same program on a long-term rental, and almost nobody publishes the delta:
Guideline
Long-term rental
Short-term rental
Income counted
100% of gross rent
75–100% — a 20–25% expense factor applies on most programs
Minimum DSCR
No floor — 0.75 and no-ratio available
1.00 to 1.15 depending on program
Max LTV — purchase
Up to 85%
75%, or a 5% reduction off standard
Max LTV — cash-out
70–75%
70%
Minimum credit score
From the low 600s
700 at top leverage
Maximum loan amount
Up to $3.5M
$1.5M on most short-term programs
Mortgage payment history
Standard
0x30x12 — no lates in 12 months
Eligible units
1–8 units
1–4 units
Vacant at closing
Allowed with an LTV reduction
Not available — needs a history or an appraiser estimate
DSCR has no agency guideline — these come from Andes Mortgage’s wholesale programs, not an industry average. Short-term rental overlays vary by lender more than almost any other guideline.
Proving the income

Five accepted ways to document nightly revenue

More paths than most investors realize — and which ones apply depends on whether you’re buying or refinancing. When more than one is available, the lowest figure is the one used.

Appraiser's short-term rent schedule

A Form 1007 or 1025, or a short-term rent narrative, prepared by the appraiser. The most common path, and the only one available on a purchase with no history.

Alternative market rent analysis

A 1007-style analysis by a licensed appraiser that includes the daily rate and occupancy percentage — useful where standard comparables are thin.

Third-party management statements

Twelve months from a rental or management service, identifying the property and rents collected. Vendor and management fees are excluded from qualifying income.

Your bank statements

Twelve months showing short-term rental deposits, supported by rental records for the property. A real option if you self-manage.

AirDNA reports — accepted, with conditions

Projection data can establish income on a property you don’t own yet, which is why it matters. But it’s purchase transactions only, and the report has to clear specific tests:

  • Rentalizer and Overview reports, from the Explore short-term rental data
  • Forecast period covering 12 months from the note date
  • At least three comparable properties
  • Comparables similar in size, room count, amenities, availability and occupancy
  • Market or sub-market score of 60 or greater
  • Occupancy capped at two people per bedroom
Gross rents equal the revenue projection — average daily rate times occupancy — and the expense factor still comes off the top.
The math

How Andes underwrites a short-term rental

How short-term rental income is calculated on a DSCR loan

DSCR = (gross monthly rent × expense factor) ÷ PITIA
The denominator is the same as any DSCR loan. What changes is the numerator, and it passes through three filters:

A 12-month average

Monthly gross rents are averaged across a full year to account for seasonality. A strong quarter doesn't set your number.

The lowest documented source

When income is supported by more than one source, the lowest monthly figure is used. On refinances that generally means your actual history is compared against the appraiser's estimate, and the smaller one governs.

The expense factor

Typically 20–25% is deducted to reflect the extraordinary costs of operating a short-term rental. If your documented expenses exceed that, the actual figure is used instead.

Legality

The income only counts if short-term rental is legally permitted and common for the area, confirmed through the appraisal and property location.

One nuance worth knowing: if a program uses the long-term market rent from the 1007 rather than a short-term figure, the expense factor generally isn’t applied — because the long-term number already reflects conventional operating assumptions.
Business-purpose, non-owner-occupied loans. Available in 46 states and Washington, D.C. Reviewed by Marcos Zambrano, President — MLO NMLS #988935. Andes Mortgage, LLC NMLS #2187991.
Why placement matters most here

No two lenders count this income the same way

The expense factor runs from zero to 25%. The minimum ratio runs from 1.00 to 1.15. Some programs accept projection data on a purchase; others require a full twelve months of history. Some exclude short-term rentals from their strongest tiers entirely. There is no standard here — which is exactly why the same file can be declined in one place and routine in another.
On the property above, the qualifying ratio swings from 1.18 to 1.57 based on placement alone. That’s a wider spread than any rate difference you’ll be quoted, and it’s invisible unless someone is comparing programs side by side.
Common questions

DSCR loans for short-term rentals — FAQ

Yes, on a DSCR loan built for short-term rentals. The property’s nightly income qualifies the deal — no tax returns, no personal debt-to-income calculation. It has to be legally permitted and common for the area, and most programs deduct an expense factor of 20–25% from the gross before calculating your ratio.

Because of the expense factor. Short-term rentals carry costs long-term rentals don’t — cleaning, turnover, furnishings, advertising, platform fees — so lenders deduct a standard 20–25% before the ratio is calculated. If your documented expenses run higher than that, the actual figure is used instead.

No. On a purchase, the appraiser’s short-term rent schedule establishes the income, so you can buy a property with no rental history at all. Some programs also accept AirDNA projection data on purchases, subject to specific conditions. Refinances generally require a full twelve months.

When income is documented from more than one source, the lowest figure is used. So on a refinance, outperforming the appraiser’s estimate doesn’t raise what you qualify for — though a strong history does confirm the number you already had.

Between 1.00 and 1.15 depending on the program — higher than a long-term rental, where we have options down to 0.75 and true no-ratio. The reduced-ratio flexibility available on standard DSCR loans generally doesn’t extend to short-term rentals.

Often, yes — condotels are eligible on several of our programs, typically at reduced leverage with a lower loan cap and a higher credit minimum. Most lenders exclude them entirely, so it’s worth asking rather than assuming.

Your loan doesn’t change — it’s closed and the terms are fixed. The risk is to your income, and it’s genuine in markets where regulation is shifting. Stress-test whether the property still covers its payment on long-term rent before you buy.

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Send us the address before you write the offer

We’ll tell you whether nightly income will count in that market, which expense factor applies, and what the deal actually looks like.
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Written & reviewed by Marcos Zambrano, President — MLO NMLS #988935 · Last reviewed July 2026
Andes Mortgage, LLC NMLS #2187991. Business-purpose, non-owner-occupied loans available in 46 states and Washington, D.C. Airbnb, VRBO, and AirDNA are trademarks of their respective owners, referenced here for identification only. Figures are illustrative and not an offer of credit. Equal Housing Lender.