DSCR Loans for Short-Term Rentals

DSCR loans can be great options to build your investment portfolio with short-term rentals.

How DSCR Loans Can Help You Finance Short-Term Rental Properties

With the rise of platforms like Airbnb and Vrbo, more investors are entering the short-term rental market to capitalize on strong nightly cash flow. But traditional mortgage options often fall short when it comes to qualifying based on rental income from these types of properties. That’s where DSCR (Debt Service Coverage Ratio) loans come in—providing a flexible, income-focused solution for short-term rental financing.

What is a DSCR Loan?

A DSCR loan is a type of real estate investment loan that uses the property's rental income—not your personal income—to qualify. Lenders look at the DSCR ratio, which compares gross rental income to the property’s monthly expenses (primarily the principal, interest, taxes, insurance, and HOA fees).

Most lenders require a DSCR of 1.00 or higher, meaning the property generates enough income to fully cover its expenses. Some allow lower DSCRs with higher down payments or rate adjustments.

Why DSCR Loans Work Well for Short-Term Rentals

Short-term rentals often generate higher income than traditional long-term rentals, but their fluctuating income can be harder to document using conventional guidelines. DSCR lenders are often more flexible in how they calculate income—some allow:

• 12-month Airbnb/Vrbo income history

• Leases from property managers or platforms

• Market rent estimates from short-term rental data services

This makes DSCR loans a great fit for newly purchased vacation rentals, properties transitioning from long-term to short-term, or seasonal units in tourist-heavy areas.

Key Benefits for Investors

• No tax returns or W-2s needed

• Close in the name of an LLC or trust

• Scalable—great for growing a portfolio

• Flexible credit and reserve requirements

• Can be used for purchase, refinance, or cash-out

Final Thoughts

If you're an investor looking to tap into the high-yield world of short-term rentals, a DSCR loan can be your ticket in—without the red tape of traditional underwriting. Whether you're buying your first Airbnb or expanding a rental portfolio, we can help you find the right DSCR program for your goals.

Contact us today to run the numbers on your next short-term rental investment.