Funding can be a major roadblock for would-be real estate investors. Securing a loan for a rental property can sometimes be challenging, but that doesn’t mean it’s impossible. With a DSCR loan, you can qualify for a loan for short-term rentals and Airbnb.

DSCR loans for short-term rentals are available for new and seasoned investors, allowing you to purchase rental properties with more flexible requirements than other types of loans for Airbnb. Interested in learning more about a DSCR loan for Airbnb and other short-term rentals? This article will discuss how these loans work, their benefits and limitations, and how you can qualify.

Why Use a DSCR Loan for Airbnb? 

DSCR loans are specially designed for rental properties, and eligibility is determined by a borrower’s debt service coverage ratio (DSCR) instead of personal income or job history. Instead of reviewing pay stubs, W-2s, and tax returns, lenders calculate DSCR to determine a borrower’s ability to repay the loan. This makes a DSCR loan a perfect solution for real estate investors who take significant deductions on their taxes or otherwise can’t qualify for a traditional mortgage. 

You can calculate DSCR by dividing your gross rental income by the debt service (including principal and interest). A DSCR of 1.0 indicates that you earn enough in rental income to afford to repay the loan. 

However, as you may already know, investors have other expenses, such as operating costs, marketing, payroll, etc. Therefore, lenders like to see a DSCR of at least 1.25 to ensure you can afford to repay the loan and cover costs that may otherwise compromise your ability to pay back your loan.

Ultimately, the higher your DSCR, the more money you have to repay your debts, which reduces some of the risks for lenders and borrowers.

DSCR Loans vs Traditional Loans for Rental Properties

When comparing a DSCR loan vs conventional loan, it’s important to understand the key differences in lending requirements:

  • Lending guidelines: Traditional loans for rental properties have stringent guidelines because they are sold to Fannie Mae and Freddie Mac, which operate in the secondary mortgage market. These conventional loans are then sold to investors globally, leading to specific underwriting criteria such as income verification, assets, credit score, and collateral.
  • Income calculation: For many investors, securing traditional loans can be challenging due to deductions on tax returns or losses from other investments. However, DSCR loans don’t consider personal income — a good DSCR loan allows borrowers to qualify based on the property’s market rent rather than traditional income measurements.
  • Limit on number of investment properties: Fannie Mae and Freddie Mac restrict the number of investment properties an individual can own and do not allow properties to be purchased under an LLC. With a DSCR loan, there are no limits on the number of properties you can purchase, and you can buy under an LLC, which may offer tax advantages.

While conventional loans might offer lower interest rates for qualified borrowers, DSCR loans are often more flexible, particularly for Airbnb and short-term rental properties.

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Using DSCR Loans for Airbnb: Pros & Cons

Like any other type of investment property loan, DSCR loans for short-term rentals have their benefits and limitations.

Outdoor, woman traveler with yellow suitcase opening closing door of the house.

Benefits

Some of the key benefits of DSCR loans for short-term rentals include the following:

  • No personal income required: The most significant benefit of a DSCR loan for Airbnb and other short-term rentals is the ability to qualify without providing personal income documentation. DSCR loans don’t take into account personal financial information, making them easier for new investors to obtain financing.
  • Faster closing times: Because lenders only have to verify a property’s DSCR and borrowers don’t have to submit personal financial information, DSCRs typically have a faster application and closing process.
  • No limit on the number of properties: DSCR loans allow you to invest in multiple properties simultaneously instead of having to pay off your loan before purchasing a new property.
  • Unlimited cash-out: DSCR loans for Airbnb allow you to take out as much cash as you need based on your home’s equity. Cash-out can help cover costs such as maintenance and repairs to get your rental property back into shape between guests.
  • Separates personal and business finances: If you close in the name of an LLC, you can keep your DSCR loan separate from your personal finances to ensure you pay the loan using business finances.
  • Property multiplier effect: Leveraging DSCR loans for Airbnb and other short-term rentals can have a property multiplier effect. Turn 1 property into 8 properties within 8 years, or 18 properties within 12 years. This is achieved by pulling cash out of the property every 2-4 years in order to capitalize on the equity you’ve built up and appreciation of the home’s value. That money can then be reinvested to expand your real estate portfolio.

Using a DSCR calculator can help you project the property’s income potential and ensure you maintain a good DSCR, making it easier to scale your investment portfolio efficiently.

Limitations

Here are a few of the limitations of DSCR loans for short-term rentals:

  • Large down payment: You can expect a large down payment with any investment property loan because this type of financing is generally considered a higher risk for lenders. Therefore, DSCR loans typically come with higher down payment requirements to mitigate some of the lender’s risk.
  • Potential cash reserves requirement: Short-term rentals like Airbnb rely on your ability to continuously get bookings. Lenders want to know you have a backup plan if you go for long stretches without guests, so they may require a certain number of months of cash reserves to ensure you can repay your loan.
  • Potential for further debt: Vacancies mean your property isn’t generating cash flow, which can affect your ability to repay your loan. If your rental property goes for long periods without a guest, you’re still on the hook for paying off your mortgage loan. Unfortunately, you risk foreclosure without cash flow, which can affect your personal and business finances.

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How to Get a DSCR Loan on a Short-Term Rental

If you are looking to build a portfolio of properties to list on Vrbo or Airbnb, you’ll want to finance them using a short-term rental (STR) DSCR loan. To qualify for a DSCR loan on a short-term rental property, you’ll need to prove through AirDNA comparables that your DSCR will be 1.00 or more. 

Here are the basic requirements borrowers must meet to get a DSCR loan for an Airbnb or short-term rental property: 

  • Minimum credit score of 640
  • Minimum DSCR of 0.75 
  • 25% minimum down payment (20% with compensating factors and based on exception)
  • Projected annual revenue divided by 12 months

If you want to refinance your STR with a DSCR loan to lower your interest rate or get cash out of your property, you’ll need to produce a stable history of short-term rental income in order to qualify for a STR DSCR cash-out refinance loan.

In addition, a DSCR HELOAN (home equity loan) can help you leverage the equity in your existing rental properties for renovations or to expand your investment portfolio. This loan type helps you to borrow against your property’s equity based on its rental income, which makes it easier to access funds without relying on traditional income documentation.

Leveraging DSCR loans for Airbnb and other short-term rentals can have a property multiplier effect — turn 1 property into 8 properties within 8 years or 18 properties within 12 years. Using a DSCR calculator can help you project the property’s income potential and ensure you maintain a good DSCR, making it easier to scale your investment portfolio efficiently.

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Secure Flexible Short-Term Rental Financing

DSCR loans can benefit new and seasoned real estate investors, offering them faster closing times and more flexible lending criteria. With a DSCR loan, you’ll qualify based on current or future cash flow from the property you purchase instead of relying on traditional income verification. However, it’s essential to understand all your loan options for Airbnb and other short-term rentals.

Griffin Funding allows DSCRs as low as 0.75 for short-term rentals, but not every investor will qualify for the loan. We can help you determine the best loan program for your next investment project to ensure you choose the right financing option. You can also use the Griffin Gold app to compare financing options, manage your finances, and get personalized help from one of our mortgage professionals.

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Frequently Asked Questions

What qualifies as a short-term rental?

A short-term rental is a property that is rented out for temporary stays, typically less than 30 days at a time, through platforms like Airbnb, Vrbo, or similar services.

Is it hard to get a DSCR loan for an Airbnb?

Getting a DSCR mortgage for an Airbnb is generally easier than a traditional loan since approval is based on the property’s rental income rather than your personal income. However, you'll still need a good credit score, and the property must generate enough rental income to cover the loan payments. 

Lenders use the debt service coverage ratio (DSCR) to assess eligibility, and a higher DSCR improves your chances of qualifying. While DSCR loans are more flexible, some factors—like additional documentation if buying under an LLC—may still apply.

What documentation do I need to get DSCR financing for an Airbnb?

In order to get DSCR financing for an Airbnb, you may need to provide the following:
  • Personal identification documents
  • Credit report
  • A rent schedule 
  • Tenant/occupancy information
  • Articles of organization (if borrowing in an LLC)
See our full DSCR mortgage document checklist to learn more about the documentation you may need for this type of financing.

Can I live in a short-term rental that’s financed with a DSCR loan?

No, a property purchased with a DSCR loan cannot be used as a primary residence. It must be used strictly for investment purposes, such as short- or long-term rentals.

Do I need rental history to qualify for a DSCR Airbnb loan?

Not necessarily. If you don’t have Airbnb income history, a property’s DSCR can be calculated using AirDNA comparables and rental rates for other properties in the area. First-time investors are welcome to apply for DSCR loans for short-term rental properties. 

If you do have a long history as an Airbnb host, the property’s DSCR can be calculated based on your Airbnb rates. You will also need a documented history of short-term rental income if you plan on refinancing using a DSCR loan.

Are DSCR loans available for refinancing short-term rentals?

Yes, Griffin Funding offers DSCR cash-out refinance loans that allow investment property owners to access their equity based on a property’s rental income. With a DSCR cash-out refinance loan, you qualify based on the property’s cash flow and replace your current mortgage with a larger loan, pocketing the difference in cash. 

You can use this cash for anything you’d like, including renovating existing properties, funding maintenance or repairs, or expanding your rental property portfolio. Use our DSCR refinance calculator to get a snapshot of what this type of loan could look like for you.

Can DSCR loans be used for multiple short-term rental properties?

Yes, there is no limit on the number of investment properties you can purchase with a DSCR loan. While conventional loans typically cap the number of investment properties a borrower can purchase at 10, DSCR loans have no such limit. This makes DSCR loans a great option for investors who are looking to scale their short-term rental portfolio.

Why should I invest in a short-term rental property?

Investing in a short-term rental property can be a great way to generate extra income, especially if you’re strategic about the type of property and area you invest in. In high-demand travel markets, you can charge premium nightly rates to maximize cash flow. Additionally, platforms like Airbnb and Vrbo are beginner-friendly, making it easy for owners to list and rent out investment properties. 

Based on AirDNA’s 2026 Short-Term Rental Outlook Report, this year may offer prime opportunities for investors hoping to step into the short-term rental market. Demand and occupancy rates are projected to grow in 2027, making 2026 a strategic time for investors to get their foot in the door.

Bill Lyons is the Founder, CEO & President of Griffin Funding. Founded in 2013, Griffin Funding is a national boutique mortgage lender focusing on delivering 5-star service to its clients. Mr. Lyons has 24 years of experience in the mortgage business. Lyons is seen as an industry leader and expert in real estate finance. Lyons has been featured in Forbes, Inc., Wall Street Journal, HousingWire, and more. As a member of the Mortgage Bankers Association, Lyons is able to keep up with important changes in the industry to deliver the most value to Griffin's clients. Under Lyons' leadership, Griffin Funding has made the Inc. 5000 fastest-growing companies list five times in its 12 years in business.