DSCR Lending · Investment Property
Short-Term Rentals & DSCR Loans: How Lenders Really Treat STR Income
Some lenders use short-term rental income for qualification — but not all, and how they use it varies a lot. This is one of the most misunderstood parts of DSCR lending.
The first thing to understand: not all DSCR lenders allow it
Most investors assume that if a property is generating strong Airbnb income, any lender will count it. That’s not true — and it’s often the difference between a deal closing and a deal dying.
Many DSCR lenders still ignore Airbnb and STR income entirely. They underwrite using a standard long-term rent estimate (Form 1007) from the appraiser instead. A property generating $80,000/year on Airbnb might be underwritten at $2,200/month in long-term rent — which can kill the DSCR calculation and the deal.
This is why matching your client to an STR-friendly lender matters as much as the property itself. The three categories of DSCR lenders break down like this:
Traditional DSCR lenders
Finance long-term rentals only. They’ll use the appraiser’s 1007 rent schedule and ignore STR income completely.
STR-cautious lenders
Will consider STR income, but with strict requirements: often 12+ months of operating history, or must also qualify on long-term rent alone.
STR-forward lenders
Built programs specifically for STR investors. Use third-party data for new properties, no operating history required, AirDNA projections accepted.
The three methods lenders use when they do allow STR income
Actual operating history
- 12–24 months of Airbnb/VRBO platform statements
- Bank statements showing deposits
- Schedule E from tax returns
- Income averaged over 12 months
- Haircut applied: typically 70–80% of gross
- Adjusted for seasonality
Third-party STR data platforms
- AirDNA Rentalizer (most accepted)
- Rabbu projections
- Used for new purchases with no operating history
- Projects revenue, occupancy, nightly rates
- Some lenders require appraiser to include STR schedule
- Lender applies 75–80% of projected figure
Hybrid / fallback approach
- Lender calculates both STR projections and long-term rent (Form 1007)
- Uses the lower of the two figures
- More common than most borrowers expect
- Protects lender against STR regulatory risk
How the DSCR calculation works with STR income
DSCR Formula
DSCR = Monthly Rental Income ÷ PITIA
Principal + Interest + Taxes + Insurance + Association dues
The formula is the same as any DSCR loan — but STR income gets treated differently before it enters that equation. Here’s what lenders typically do:
Example: A property projects $7,500/month gross STR income per AirDNA. After a 20% expense factor and 75% qualifier, the lender uses roughly $4,500/month in qualifying income. If PITIA is $4,000, DSCR = 1.125. Deal works.
What lenders are really worried about with STRs
Short-term rentals carry risks that traditional rentals don’t — and experienced DSCR lenders build all of this into their underwriting criteria.
Because of this elevated risk profile, STR deals typically require higher reserves (often 6–12 months of PITIA), a higher down payment (20–25% minimum, sometimes 30%), stronger credit (680+ preferred), and in some cases documented landlord or real estate experience.
The STR data platforms lenders actually use
These are real tools used in actual underwriting — not just investor research tools. If you’re working with a client on an STR purchase, it’s worth familiarizing yourself with what the lender’s underwriter will be looking at.
AirDNA
~$299–$599/yr per market (enterprise custom pricing)
- Industry standard for underwriting
- Revenue & occupancy projections
- Average Daily Rate (ADR) data
- Seasonality curves
- Market comps
- Rentalizer™ tool (property-level)
Most widely accepted by lenders
Rabbu
Free (subscription tier available)
- Lender-ready business plan output
- Revenue & occupancy projections
- Property-level analysis
- Integrates with STR lenders directly
- Useful for no-history purchases
Accepted by many DSCR lenders
Mashvisor
~$30–$120/mo depending on tier
- STR vs. long-term rental comparison
- Property-level ROI analysis
- Neighborhood heatmaps
- Cap rate & cash-on-cash return
Accepted by some lenders
AirROI
Free
- Real-time comp data
- Property-level projections
- Good for cross-referencing
- Less established for underwriting
Emerging — verify with lender
Pro tip for NH clients: AirDNA and Rabbu both cover New Hampshire markets well — including Lakes Region, White Mountains, and seacoast properties. Run a Rabbu projection (free) as a quick sanity check, then confirm with AirDNA if the lender requires it. The two numbers should be reasonably close; large discrepancies are a flag worth investigating before closing.
Conventional loans vs. DSCR for STR: the key difference
If a borrower wants to go the conventional route (Fannie Mae/Freddie Mac), the standard 75% of market rent rule applies — but the appraiser is estimating long-term market rent, not Airbnb rates. That number can be 30–50% below what the property will actually generate as a short-term rental.
DSCR loans flip the model: no tax returns, no W-2s, no personal DTI calculation. Qualification is based entirely on whether the property cash-flows. That’s why STR investors have largely migrated to DSCR — it’s the only structure that lets the income speak for itself.
Conventional Fannie/Freddie: Uses appraiser’s long-term rent estimate (Form 1007). 75% of that figure counts. STR income is largely invisible to the underwriter.
DSCR (STR-forward lender): Uses AirDNA or operating history. 70–80% of projected STR income counts. No personal income documentation required.
Not all DSCR lenders treat short-term rental income the same — and even STR-friendly lenders underwrite it conservatively, using third-party data or adjusted averages rather than taking gross projections at face value.
For NH vacation rental markets — the Lakes Region, the White Mountains, the seacoast — there is strong lender appetite for STR deals when structured correctly. The key is matching the property and borrower to the right DSCR lender from the start, not discovering after submission that the lender only underwrites to long-term rent.
If you’re considering a short-term rental purchase and want to know how your specific property would qualify, let’s talk through the numbers.
Questions about STR financing in New Hampshire?
As an independent mortgage broker licensed in NH, I work with multiple lenders — including those that specialize in DSCR and short-term rental deals. Let’s find the right fit for your deal.