Airbnb Loans

What Are Airbnb Loans?

Airbnb loans are specialized financing options designed to help investors purchase, refinance, or renovate properties intended for short-term rental use. These loans recognize that traditional rental properties and vacation rentals operate differently, often requiring more flexible underwriting criteria that consider projected rental income rather than just personal income. 

Short-term rental loans can be used to finance various property types, including vacation homes, second residences, condominiums, single-family homes, and multi-unit properties. The main difference between Airbnb lending and traditional mortgages is that lenders understand these properties will generate income through platforms like Airbnb, VRBO, and other short-term rental services.

Types of Airbnb Loans We Offer

Griffin Funding provides several traditional mortgage options that can be used to finance your Airbnb investment property, including: 

• Conventional loans: These are standard mortgages backed by Fannie Mae or Freddie Mac that can be used for second homes or investment properties. These loans often come with higher down payments and have stricter qualification requirements for investment properties. 
• Home equity loans: If you already own a primary residence with significant equity, you can use a home equity loan to access that equity and purchase an Airbnb property. HELOANs give you access to a lump sum of cash at a fixed mortgage rate. 
• Cash-out refinance loans: This type of mortgage loan lets you refinance your existing mortgage for more than you owe. You can then use the extra cash to purchase an Airbnb property. It’s an effective way to leverage the equity in your current home. 
• Home equity line of credit: A HELOC is a revolving line of credit, with the borrowing limit based on your home’s equity. You can draw funds as needed for your Airbnb purchase and only pay interest on what you use.  
• Portfolio loans: These are loans that lenders keep on their books rather than selling to government-sponsored entities. Portfolio loans often have more flexible underwriting guidelines and can be customized for unique situations. 

Non-QM Airbnb Financing Options

For investors who don’t qualify for traditional financing, we offer several non-QM loans specifically designed for alternative income documentation. These include: 

• DSCR loans: Debt service coverage ratio loans qualify borrowers based on the property’s ability to generate rental income rather than personal income. These loans are perfect for investors who want to use projected Airbnb rental income for qualification. 
• Bank statement loans: Instead of providing tax returns and W-2s, borrowers can qualify using bank statements that show consistent deposits. This works well for self-employed investors or those with variable income. 
• Asset-based loans: These loans use your liquid assets as the primary qualification factor rather than traditional income verification. If you have substantial savings or investments, you may qualify even without traditional employment income.  
• Hard money loans: These are short-term, asset-based loans that can close quickly and are often used for fix-and-flip properties or when you need to purchase quickly in competitive markets. 

Benefits of Financing Your Airbnb Property

Using a loan for an Airbnb investment offers several advantages over paying cash. 

• Passive income potential and high ROI from short-term rentals: Short-term rental properties often generate significantly higher returns than traditional rentals. This high return potential makes financing an attractive option because you can leverage your capital and potentially invest in multiple properties at once. 
• More leverage with financing vs. cash purchase: Instead of tying up all your money in one property, you might put down a percentage and use financing for the rest. This leaves you with capital to invest in additional properties or handle unexpected expenses, allowing you to build a larger portfolio faster. 
• Build equity while generating rental income: Every monthly payment reduces your loan balance while the property potentially appreciates in value. Over time, this dual benefit can create substantial wealth as tenants essentially pay down your mortgage for you. 

How to Qualify for an Airbnb Loan

To qualify for short-term rental loans, you need to meet certain financial and property requirements that may differ from traditional home purchases. Basic eligibility criteria include: 

• Credit score: Most home loan providers look for a score of at least 620-640, though higher scores unlock better rates and terms. 
• Income verification: You’ll need documentation like pay stubs, tax returns, or bank statements proving that you have the means to repay the loan.
• Property type and location: The property must be in an area where short-term rentals are legal and have strong rental demand potential. 
• Down payment: Investment properties typically require 20-25% down, though some loan programs may be more flexible. 

For investment properties, many lenders now use DSCR-based qualification. This means they’re more interested in whether the rental income covers the mortgage payment than your personal income. The property’s cash flow potential is the primary factor in approval, making it easier for investors to qualify based on the investment’s merit rather than just personal finances. 

Griffin Funding specializes in working with investors who don’t fit standard lending criteria. Whether you’re self-employed, have multiple income sources, or need flexible qualification terms, we offer personalized loans designed specifically for investors who want to build their portfolios. 

Why Choose Griffin Funding as Your Airbnb Lender?

Investment property financing can be complicated. When it comes to Airbnb financing, you need a partner who understands the short-term rental market and can move quickly when opportunities arise. Here’s why you should choose Griffin Funding: 

• Extensive experience with short-term rental investors: Our team understands the unique challenges of Airbnb financing and has loan options designed specifically for this market. We know how to evaluate rental income potential and work with borrowers who have non-traditional income sources. 
• Exceptional customer service and fast closing times: While other lenders take up to 60 days or more to close, we often complete loans in 30 days or less. Our flexible terms mean we can find solutions for borrowers who have been turned down elsewhere. 
• Proven track record: With over a decade of experience in the lending industry and over $3.6 billion in funded loans, we’ve built our reputation on helping real estate investors achieve their goals. Our clients regularly refer friends and family because they know we deliver on our promises. 

Discover Airbnb Financing Options Today

The current housing market offers plenty of unique opportunities for smart investors, and you need a partner who can help you capitalize on them quickly. Griffin Funding’s deep understanding of the short-term rental market, combined with our extensive lending options, positions us to help you achieve your investment goals. 

Ready to explore your Airbnb financing options? Download the Griffin Gold app to get started with the pre-approval process or simply learn more about our loan options. If you’re ready to take the first step toward pre-approval, get started online.