🏡 Can You Use a DSCR Loan for a Short-Term Rental? Here’s What to Know! 🔍

💰 DSCR Loans for Airbnb & Short-Term Rentals: What Lenders Really Think 🏠

Can You Use a DSCR Loan for a Short-Term Rental? Here’s What You Need to Know

If you’re an investor who loves the cash flow potential of Airbnb or short-term rentals, you might be wondering: Can I use a DSCR loan to finance one?
The short answer — yes, but there’s a catch.

✅ What is a DSCR Loan?

A Debt Service Coverage Ratio (DSCR) loan is designed for real estate investors who want to qualify based on property cash flow — not personal income. Lenders look at the ratio between the property’s net operating income (NOI) and the loan’s debt payments.

It’s a perfect fit for long-term rental investors because the income stream is predictable. But short-term rentals? That’s where it gets tricky.

⚠️ Can You Use DSCR Loans for Short-Term Rentals?

Yes, you can — but only certain lenders allow it.
Most DSCR lenders prefer 12-month leases or long-term tenants, which provide consistent income data for underwriting. Short-term rentals, on the other hand, can have seasonal dips, variable occupancy, and volatile nightly rates — all of which make lenders more cautious.

If you already have a proven track record with short-term rental income or can show consistent Airbnb or VRBO revenue statements, your chances improve significantly.

💡 Why Some Lenders Avoid Short-Term Rentals

Lenders like stability. When they underwrite DSCR loans, they’re assessing how reliably a property can cover its mortgage payments.
A short-term rental — even one that performs well — carries more uncertainty because:

·Income can fluctuate based on tourism trends or local regulations.

·Platforms like Airbnb and VRBO can change policies.

·It’s harder to project annual income without long-term leases.

As a result, the lender pool is smaller. But that doesn’t mean it’s impossible.

🧭 How to Improve Your Approval Odds

If you want to use a DSCR loan for a short-term rental:

1.Show income proof: Use Airbnb, VRBO, or property management income reports to document performance.

2.Work with a flexible broker: Partner with an advisor who has access to multiple lenders — not just one or two.

3.Consider hybrid rental models: Some lenders prefer mid-term leases (3–6 months) for corporate housing or traveling nurses, which can strike a balance between cash flow and predictability.

4.Have strong reserves: Extra liquidity reassures lenders in case of off-seasons or vacancies.

🏁 Final Thoughts

A DSCR loan can fund your next short-term rental — you’ll just need the right lender and documentation to make it happen.
If you’re an investor exploring Airbnb, VRBO, or short-term rentals, Medallion Funds can connect you to lenders who understand your goals and get creative with underwriting.

👉 Let’s turn your rental income into scalable wealth — one property at a time.

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© 2023-2024 Bill Rapp, Medallion Funds LLC, Director of Capital Advisory