Quick answer
Short-term rental DSCR loans qualify a furnished, nightly-rental property on its projected or historical booking income instead of a long-term lease. Lenders typically rely on trailing booking statements, third-party market data or an appraisal with a short-term rent analysis, and many apply a haircut for seasonality and expenses. Local rules on short-term rentals also matter.
Often suits
- Investors buying vacation or resort-area property to rent nightly
- Owners with a booking track record who want to refinance
- Operators converting a long-term rental to short-term use
What lenders evaluate
- Trailing booking or payout statements, where available
- Market data or appraiser analysis for projected income
- Local zoning, permits and association rules on nightly rentals
- Seasonality and occupancy assumptions
- Furnishings, management arrangements and insurance coverage
Three common ways to establish income
- Booking history: twelve months or more of statements from the listing platform or property manager, averaged to a monthly figure
- Market data: projections from third-party short-term rental data for comparable listings
- Appraisal analysis: an appraiser’s estimate of short-term income alongside the standard market rent schedule
Programs differ on which sources they accept, whether they average or annualize, and whether they apply a reduction to account for platform fees, cleaning and vacancy. The same property can show noticeably different ratios under different methods, which is one reason a broker comparing several wholesale lenders can be useful here.
Local rules come first
Many cities and associations restrict or license nightly rentals. Lenders may ask for evidence that short-term use is permitted. Confirm zoning and any association covenants before you rely on short-term income, both for the loan and for the investment itself.
Not a second home
A vacation property you plan to use yourself is a second home, not an investment rental, and is not eligible for the business-purpose programs we arrange. The property must be operated as a rental business with no personal use.
Questions about short-term rental loans
Can I use projected income on a short-term rental I have not operated yet?
Some programs accept market data or an appraiser’s short-term income analysis for new operations. Others require a booking history. It depends on the wholesale lender.
Can I stay in my short-term rental a few weeks a year?
Not on a business-purpose DSCR loan. The property must be non-owner-occupied investment property with no personal use.