KEY TAKEAWAYS

  • DSCR loans for short-term rentals qualify mainly on the property’s rental income, not the investor’s tax returns, W-2s, pay stubs, or personal debt-to-income ratio.
  • A purchase with no rental history may qualify with an appraiser’s short-term rental analysis, accepted market data such as AirDNA, or both. A refinance usually requires 12 months of the property’s actual rental history.
  • Lenders may reduce gross short-term rental revenue before calculating DSCR. When a program uses a 20% expense factor, 80% of eligible revenue counts as qualifying income.
  • The property must be legally eligible for short-term rental use. Before buying, calculate the property’s DSCR using both projected STR revenue and supported long-term rent.

 

DSCR loans let investors finance eligible short-term rentals based mainly on the property’s current or projected rental income. Griffin Funding offers DSCR loans for Airbnb, Vrbo, and other vacation-rental properties without using tax returns, W-2s, or pay stubs to verify personal income.

These loans can work for new and experienced investors, including self-employed borrowers and investors purchasing through an LLC. Approval still depends on the property, appraisal, credit, reserves, loan terms, and whether short-term rentals are legally permitted at the address.

Why Use DSCR Loans for Airbnb?

A DSCR loan for Airbnb properties lets you qualify using the rental’s cash flow without submitting tax returns, W-2s, or pay stubs to prove personal income. Griffin Funding may also qualify the loan without calculating your personal DTI, and a property below 1.00 is not always disqualified.

For residential DSCR loans, the formula is:

DSCR = qualifying monthly rent divided by monthly PITIA

PITIA includes principal, interest, property taxes, insurance, and HOA dues when applicable. A ratio of 1.00 means the qualifying rent covers the full payment. A higher ratio provides more coverage, while a ratio below 1.00 means the property does not fully cover PITIA.

“A 1:1 ratio means the rent covers the full PITIA payment,” says Kristi Manion, loan officer at Griffin Funding (NMLS #1314037). “A 0.75 ratio means the rent covers 75% of it, and on our no-ratio tier, the rental income figure doesn’t govern the decision at all.”

A ratio of 1.25 or higher can support stronger pricing, but it is not Griffin Funding’s universal minimum. Griffin also offers a 0.75 to 1.00 tier and a no-ratio option. Credit, LTV, reserves, property type, and the rest of the loan still determine which tier and terms are available.

On a recent coastal South Carolina STR closing, high property taxes and flood-zone insurance pushed the ratio below 1.00. Griffin Funding still closed the loan in the 0.75 to 1.00 band. Coverage that low is not the norm, but stronger credit, more equity, or additional reserves may keep the file workable.

How a 20% STR Expense Factor Changes the Calculation

Short-term rental revenue is not always counted at 100% of gross. Some programs apply an expense factor to account for the costs of operating the property, such as advertising, furnishings, and cleaning. Where a program uses a 20% factor, it is usually a minimum, and the lender uses your actual expenses if they run higher. Other Griffin Funding programs qualify the property on gross STR revenue, with no expense factor.

Consider an illustrative $425,000 purchase with 20% down and a $340,000 loan. AirDNA shows a $285 average nightly rate at 62% occupancy for comparable three-bedroom homes in the submarket. At 226 booked nights, projected gross annual revenue is $64,410.

If the program applies a 20% expense factor, 80% counts toward qualification:

$64,410 x 80% = $51,528 in annual qualifying income

Divide that figure by 12 to get $4,294 in monthly qualifying income. If monthly PITIA is $2,980, including the correct STR insurance premium, the calculation is:

$4,294 divided by $2,980 = 1.44 DSCR

Now compare the same property as a long-term rental. At $2,650 in monthly rent, its ratio would be:

$2,650 divided by $2,980 = 0.89 DSCR

The STR income creates the qualifying margin in this example. The long-term result also shows the risk: if local rules later prevent short stays, the property may not cover its PITIA with a traditional tenant.

On a recent Maryland cash-out refinance, the program used 80% of eligible STR revenue rather than the borrower’s full gross figure. That reduced qualifying income and the available cash-out. Before setting a target, run a conservative calculation using 80% of gross revenue and full PITIA. The exact treatment depends on the program.

Can You Use a DSCR Loan on a Property With STR Restrictions?

Only if short-term rental use is legal at the address or the loan can qualify another way. Before funding, the lender may review zoning, permit or licensing requirements, HOA and condo rules, appraisal comments, and other evidence that the proposed rental use is allowed.

A ban, unavailable permit, residency requirement, or permit cap can prevent underwriting from using projected STR revenue. The property could still qualify using supported long-term rent or a no-ratio program.

Local rules generally fall into three broad groups:

Regulatory tier What it means Example
Broadly permissive STRs are generally allowed, although registration, tax, insurance, safety, and operating requirements may apply. Phoenix, Arizona allows STRs but requires owners to register and follow local operating rules.
Permit required or use limited The host needs a license, and eligibility may depend on residency, property count, zoning, or other conditions. Atlanta requires an annual STR license and generally limits a host to a primary residence and one additional dwelling unit.
Prohibited or tightly capped Whole-home STR use may be barred, restricted to narrow areas, or limited by scarce permits. New York City does not allow an entire home or apartment to be rented for fewer than 30 days in a permanent residential building. Legal hosted stays require registration, and the host must remain in the unit.

Rules can differ between a city and its surrounding county. A nearby Airbnb may sit in another zoning district, have a grandfathered permit, or operate illegally, so its presence does not prove the subject property is eligible.

Before making an offer, verify all rules for the exact address. Ask whether the permit transfers with a sale, whether new permits remain available, and whether non-owner-occupied rentals are treated differently.

Build a Long-Term Rental Plan B

Your mortgage terms do not automatically change if a city restricts STRs after closing, but the property’s income can change immediately. You still owe the full payment and may need to switch to medium-term or long-term tenants.

Use the worked example above as a stress test. The property has a 1.44 DSCR when the program uses 80% of projected STR revenue, but only a 0.89 DSCR at the supported long-term rent. The buyer can see that potential coverage gap before closing and decide whether to increase the down payment, hold more reserves, choose another loan tier, or buy a different property.

Griffin Funding’s DSCR Loan Requirements for Short-Term Rentals

Griffin Funding offers several DSCR programs rather than one fixed set of terms. Your available LTV, rate, reserve requirement, and prepayment structure depend on the property and full loan scenario.

Requirement Griffin Funding guideline
STR Loan amount $100,000 to $4.5 million
STR DSCR No universal minimum; 1.25 or higher can receive stronger pricing, with 0.75 to 1.00 and no-ratio options available
STR Credit score 620 minimum; higher scores unlock higher LTVs and loan amounts
Maximum STR LTV Up to 85% on purchases and rate/term refinances for experienced investors with 740+ credit, a 1.00+ DSCR, and a loan up to $1.5 million; cash-out up to 75%. Many STR programs cap at 75% purchase and 70% refinance.
STR reserves Varies by program. Some require none on loans up to $2.5 million at 80% LTV or less. Others require 6 to 18 months of PITIA based on LTV and loan amount, and some add months for each other financed property.
STR Cash-out No dollar cap at lower LTVs on some programs; at higher LTVs, cash-out may be capped at $500,000 to $1 million
Prepayment penalty Commonly a 5-4-3-2-1 step-down structure; shorter or no-penalty options may affect pricing
Property use Non-owner-occupied rental only; eligible properties may include one- to four-unit homes, condos, townhomes, and PUDs
Ownership Eligible programs allow closing in a U.S. LLC with a personal guarantee

Even where a program has no dollar cap, an investor cannot withdraw any amount.. The property’s appraised value, maximum LTV, loan limit, existing liens, DSCR tier, and underwriting still determine the proceeds.

See Griffin Funding’s complete DSCR loan requirements for more information about credit, reserves, appraisals, and eligible properties. You can also review current DSCR loan rates and the requirements for getting a DSCR loan for an LLC.

How Lenders Calculate Short-Term Rental Income

The documents you need depend mainly on whether the property has operating history and whether you are purchasing or refinancing. When both projected and actual figures are available, the loan program may use the more conservative supported amount.

“On a purchase, we’re looking at an appraiser’s short-term rental analysis or AirDNA data,” says Kristi Manion, loan officer at Griffin Funding (NMLS #1314037). “On a refinance, it’s a lease if the property’s a long-term rental, or twelve months of platform history from Airbnb or Vrbo if it’s short-term.”

Appraiser Short-Term Rental Analysis

An appraiser’s STR analysis may support a purchase with no rental history. It can compare nightly rates, occupancy, property type, bedroom count, amenities, seasonality, and location.

The appraiser can complete a dedicated STR analysis form or include the STR analysis with Form 1007 for one-unit properties or Form 1025 for two- to four-unit properties. The analysis must name its data source and use comparable short-term rentals matched on room count, living area, location, and market appeal. It must also show the daily rate and occupancy and account for seasonality and vacancy. A licensed appraiser must complete it. It is the Single-Family Comparable Rent Schedule used to estimate monthly market rent for a one-unit property.

Short-term rental qualification may require a separate investor-specific addendum or schedule alongside the standard appraisal. For a two- to four-unit property, Form 1025 includes rental analysis, but the lender may still require additional STR support.

Twelve-Month Airbnb or Vrbo Statement

An existing host refinancing an operating short-term rental will usually need 12 months of rental history from the Airbnb or Vrbo earnings export. Some programs also accept a 12-month statement from a third-party property management company. Qualifying income is typically the average monthly rent over those 12 months.

The statement must identify the subject property and show rents collected for each of the past 12 months. Programs that accept property manager statements also require all management fees to be listed and calculate qualifying income net of those fees. A screenshot is usually not enough, and a report covering several rentals must break out the subject property’s revenue.

Personal Bank Statements Showing Deposits

The lender may request 12 months of bank statements to reconcile platform earnings with received deposits. Transfers, unrelated deposits, and income from other rentals must be separated.

Bank statements can support the revenue trail. Some programs accept 12 months of bank statements showing STR deposits as the primary income documentation, as long as you also provide rental records for the property that support those deposits. Other programs use bank statements only to confirm a platform statement. or appraisal analysis. The required combination depends on the loan program.

AirDNA or Comparable Market Data

AirDNA may support a purchase when the property has no operating history. The comparison set should resemble the subject property’s type, bedroom count, location, seasonality, and amenities. A beach house with a pool should not be compared with inland properties just because they share the same ZIP code.

Some programs accept third-party rental projections for a purchase, while others require both a projection and an appraiser’s short-term rental analysis. The lender decides which reports are acceptable and which income figure to use.

Programs that accept AirDNA limit it to purchases and set minimums for the report. Typical requirements are a 12-month forecast dated within 90 days of closing, three to four comparable properties, a minimum occupancy rate, and a market score of 60 or higher. For a two- to four-unit property, some programs require a separate report for each unit. When the appraiser also provides an STR analysis, the lender generally uses the lower of the two figures.

In simple terms:

  • Buying a short-term rental with no rental history:: You will typically need an appraiser’s STR analysis, approved third-party rental projections, or both.
  • Refinancing an existing short-term rental: You will typically need 12 months of Airbnb or Vrbo income history, often matched against your bank deposits.

See the DSCR mortgage document checklist for the other documents a borrower may need.

DSCR Loan vs. Conventional Loan vs. Bank Statement Loan

The best financing option depends on which income source is strongest and easiest to document. A conventional loan may work well if you have steady personal income, while a bank statement loan may be a better fit if you are self-employed and qualify based on deposits. DSCR financing qualifies you primarily based on the property’s rental income.

Feature DSCR loan Conventional loan Bank statement loan
Qualifies mainly on Property income Personal income and DTI, subject to agency rental-income rules Personal or business deposits and DTI
Personal tax returns required No Sometimes; often required for self-employment or rental-income documentation No
Can use first-year STR projections Often, when the program accepts appraisal or market data Generally limited; agency rules usually rely on eligible leases or monthly market rent rather than nightly STR projections Not as the primary qualifying method
Financed-property limit No fixed program count Generally up to 10 financed properties under Fannie Mae’s DU rules for second-home and investment-property borrowers Varies by program
Can close in an LLC Yes, on eligible programs No for a standard individual conventional mortgage Varies by occupancy and program
Typical close time Griffin averaged 34 days through July 31, 2026; its fastest close was 6 days Commonly 30 to 45 days Commonly 30 to 45 days; timing varies by file

As equity builds, an investor may use a DSCR cash-out refinance to help fund another purchase. The available amount still depends on the property’s value, LTV, cash flow, closing costs, and any prepayment penalty. Investors comparing broader financing choices can also review Griffin Funding’s investment property loans.

How a Self-Employed Investor Financed a New-Construction STR

A self-employed Florida investor wanted to buy a new-construction home as a short-term rental. He planned to qualify on the property’s rental income instead of his personal income and hold title in an LLC. He already operated several rental properties and had multiple income streams.

The appraisal included a short-term rental analysis, and the borrower supplied operating figures from comparable nearby rentals he owned. The supported STR income put the debt-service ratio above 1.25.

The borrower later requested a long-term rent schedule. Griffin Funding coordinated the appraisal supplement, preserving more loan options and documenting a fallback rent. A lender may request a correction or supplement when the original appraisal omits a necessary rent analysis.

Because the property was unfinished at appraisal, the report was subject to completion. The remaining work and final inspection had to be cleared before funding.

Reserves also depended on the selected program and the borrower’s other financed properties. One available option required 12 months of PITIA for the subject loan and two months for each additional property reporting on credit, which came to roughly 16 months for this borrower. Eligible retirement and brokerage assets could help satisfy the requirement, so the full amount did not need to remain in cash.

Some loan options did not permit LLC vesting. Griffin placed the loan in a program that allowed the LLC, STR qualification, and a three-year prepayment structure. Griffin then locked the rate before the deadline and fitted the closing costs to the available seller concession. The loan funded on January 20, 2026.

This was one borrower’s experience, not a universal reserve or loan-structure requirement. It shows why a lender needs to match the property, income evidence, ownership structure, reserves, and construction status to the same program.

Where Short-Term Rentals Still Pencil

The right market is not simply the place with the highest advertised nightly rate. Demand needs to be durable, local rules need to support the intended use, and the property still needs to work after taxes, insurance, HOA dues, management costs, maintenance, and seasonal vacancies.

AirDNA’s 2026 outlook forecast 2.7% growth in both U.S. supply and demand, 57.4% average occupancy, and 2.9% RevPAR growth. Its July 2026 review reported average daily rates up 6.9% year over year. These national figures provide context, but they should not be used to project one property’s income.

Kissimmee, Florida

Kissimmee draws family and group travel tied to the Orlando theme parks. Eligibility for Florida DSCR loans depends on county zoning, licensing, and the exact property address. Homes inside established vacation-rental communities may have a clearer operating path than houses in ordinary residential neighborhoods.

Gatlinburg and Pigeon Forge, Tennessee

The Great Smoky Mountains create year-round drive-to demand, with cabins serving families and groups. Investors considering Tennessee DSCR loans still need to check permits, safety inspections, occupancy rules, and zoning. Bedroom count, mountain access, and proximity to park entrances can materially change a cabin’s comparable set.

Phoenix and Scottsdale, Arizona

Winter travel, golf, Spring Training, and major events support seasonal demand across the Phoenix area. Owners using Arizona DSCR loans must follow local registration, tax, insurance, and operating requirements even where STR use is broadly allowed. A few high-revenue event weeks should not replace a full-year occupancy estimate.

Myrtle Beach, South Carolina

Beaches, golf, youth sports, and family travel support a broad visitor base in Myrtle Beach. Zoning and business-license rules for South Carolina DSCR loans differ by municipality across the Grand Strand. Flood-zone insurance and coastal property taxes can lower DSCR even when nightly revenue appears strong.

How STR Insurance Affects Your DSCR

A standard homeowners or long-term landlord policy may exclude commercial short-term rental activity. You may need vacation-rental coverage for guest-related liability, property damage, lost rental income, and any flood or wind exposure required for the address.

The premium becomes part of PITIA, so a higher insurance quote lowers the DSCR dollar for dollar. Get the correct STR quote before relying on a projected ratio, especially for a coastal or flood-zone property. Use our DSCR calculator to see how the insurance premium affects your PITIA and projected DSCR.

How to Get a DSCR Loan for a Short-Term Rental or Airbnb Property

For investors seeking a DSCR loan for a short-term rental or Airbnb property, the process starts with verifying the property rather than gathering personal income documents.

  1. Confirm that STR use is legal. Review the city, county, zoning district, permit rules, HOA or condo documents, and insurance requirements for the exact address.
  2. Calculate two ratios. Estimate qualifying STR income and supported long-term rent, then divide each figure by the property’s full PITIA.
  3. Prepare the income evidence. A purchase may use an appraiser’s STR analysis or accepted market data. A refinance usually requires 12 months of platform history and may require bank statements.
  4. Document the rest of the file. Be ready to provide identification, credit authorization, asset and reserve statements, appraisal access, entity documents, and information about other financed properties.
  5. Compare the complete terms. Review the DSCR tier, LTV, interest rate, points, fees, reserve requirement, and prepayment penalty before locking the loan.

The lowest advertised rate does not automatically produce the best structure. A lower rate may require points, more equity, or a longer prepayment period. Compare the cash due at closing and the cost of selling or refinancing early, not just the monthly payment.

Finance Your Short-Term Rental With Griffin Funding

Griffin Funding offers DSCR loans for short-term rentals from $100,000 to $4.5 million, with options for LLC borrowers and properties that fall below a 1.00 DSCR. A loan officer can review the address, income documents, reserve position, long-term rental fallback, and available terms before you commit to a structure. Get started online to discuss your property.

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Frequently Asked Questions

What qualifies as a short-term rental?

A short-term rental is generally a non-owner-occupied investment property rented for brief stays, often fewer than 30 days, through Airbnb, Vrbo, or a similar platform. The legal definition varies by jurisdiction. A DSCR loan for a short-term rental or Airbnb property requires the home to meet the lender's guidelines and be legally eligible for the proposed use.

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

No. DSCR loans are for non-owner-occupied investment properties. You cannot use the property as your primary residence or buy it as a vacation home for personal use. Disclose any planned occupancy before closing because limited personal-use rules may also vary by program.

Do I need rental history to qualify?

Not always. On an eligible purchase, we may use an appraiser's short-term rental analysis, accepted market data such as AirDNA, or both. A refinance of an operating Airbnb or Vrbo usually requires 12 months of platform history and may also require statements showing the deposits.

Do I need an STR permit, and what happens if the rules change?

If local law requires a permit, the lender generally needs evidence that the property can operate legally. If the city restricts STRs after closing, the mortgage remains in place, but the income may not. You may need to switch to medium-term or long-term tenants while continuing to make the full payment.

What is the maximum LTV on a short-term rental?

Griffin Funding may offer up to 85% LTV, or 15% down, on eligible short-term rental purchases and rate/term refinances. That requires at least 12 months of experience owning and managing rental property, a credit score of 740 or higher, a DSCR of at least 1.00, and a loan amount up to $1.5 million. Cash-out refinances top out at 75%. Many STR programs cap LTV at 75% for purchases and 70% for refinances, and first-time investors should expect those lower limits. Your maximum also depends on your loan purpose, property type, and local market.

Will Griffin Funding use AirDNA projections or my actual bookings?

We may use either, depending on the loan program and transaction. For a purchase without rental history, we may qualify the property using AirDNA projections, an appraiser’s STR analysis, or both. For a refinance, we typically review 12 months of actual Airbnb or Vrbo income. If both projected and actual income are available, underwriting may use the lower supported amount.

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 25 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 six times in its 13 years in business. Follow his updates on LinkedIn.