How to Finance an Airbnb or Short-Term Rental Property With a DSCR Loan

DSCR Loan Quick Summary: A DSCR loan qualifies borrowers based on the rental property’s income rather than personal income. Georgia investors typically need a minimum credit score of 620, a 20–25% down payment, and a DSCR ratio of 1.0 or higher. No tax returns or employment verification required.

Short-term rentals (STRs) on platforms like Airbnb and VRBO have created a new class of real estate investors — but financing these properties with traditional mortgages can be frustrating. Conventional lenders typically don’t accept nightly rental income for qualification, leaving STR investors in a bind. The DSCR loan short-term rental approach eliminates these barriers.

DSCR loans solve this problem. They’re specifically designed to qualify investment properties based on their rental income potential, and many DSCR loan short-term rental lenders explicitly accept nightly rental projections. Here’s how it works.

Why Conventional Loans Don’t Work Well for Airbnb Properties

When you apply for a conventional investment property mortgage, the lender calculates your debt-to-income ratio using your personal income from tax returns. They’ll give you credit for 75% of the long-term rental income on the property (per the appraiser’s estimate), but they generally won’t consider Airbnb or VRBO income.

This creates two problems:

Your STR income isn’t counted — Even if the property generates $5,000/month on Airbnb, the lender may only credit $1,800/month based on long-term rental comparables.
Your DTI gets inflated — Without the STR income credit, the full mortgage payment counts against your debt-to-income ratio, limiting how many properties you can finance.

How DSCR Loans Handle Short-Term Rental Income

DSCR loan short-term rental lenders take a fundamentally different approach. Instead of looking at your personal income, they ask one question: Does the property’s rental income cover the mortgage payment?

For STR properties, lenders determine rental income using one of these methods:

Method 1: AirDNA or Similar STR Analytics

For properties without existing booking history (like new purchases), lenders use third-party STR data platforms — most commonly AirDNA — to project annual rental income based on comparable properties in the area. The report considers location, property size, amenities, seasonality, and local occupancy rates.

Method 2: Actual Booking History

If you’re refinancing a property you already operate as an STR, lenders can use your actual 12-month booking income from Airbnb, VRBO, or your property management software. This often produces a higher qualifying income than projections.

Method 3: Traditional 1007 Rent Schedule

Some lenders will also accept the standard appraiser’s rent schedule, but this uses long-term rental comparables and typically produces a lower income number. You’d usually only fall back to this if the STR methods aren’t available.

STR DSCR Loan Requirements

Minimum DSCR: 1.0 (using STR income methodology)
Credit score: 660+ (some lenders require 680+ for STR)
Down payment: 20–25%
Property types: Single-family homes, condos (must be in STR-friendly complex), cabins, townhomes
STR documentation: AirDNA report, booking history, or property management statements
Local regulations: The property must be in a jurisdiction that permits short-term rentals. Lenders will verify this.
Reserves: 6–12 months PITIA in liquid assets (some lenders require more for STR)

Top STR Markets Where DSCR Loans Excel

North Georgia Mountains

Blue Ridge, Ellijay, and Helen cabins consistently rank among the Southeast’s top-performing STR markets. Mountain cabins with hot tubs and views command $200–$400+ per night during peak season, pushing DSCR loan short-term rental ratios well above 1.25.

Savannah & Tybee Island, GA

Historic Savannah and beachfront Tybee attract visitors year-round. Properties in the historic district can generate $3,000–$6,000/month in gross STR revenue.

Destin & 30A, FL

The Emerald Coast is a proven vacation rental market with strong seasonal income. Beachfront and beach-adjacent properties generate premium nightly rates.

Smoky Mountains, TN

Gatlinburg, Pigeon Forge, and Sevierville form one of the most active STR markets in the country. Cabin properties with mountain views and resort-style amenities perform exceptionally well.

Coastal Carolinas

Charleston, Myrtle Beach, and the Outer Banks offer diverse STR opportunities from urban short-stay to beach vacation rentals.

How to Maximize Your STR DSCR Ratio

Choose high-demand locations — Properties near tourist attractions, beaches, mountains, or urban entertainment districts generate higher nightly rates and occupancy.
Add revenue-boosting amenities — Hot tubs, game rooms, fire pits, and pools can increase nightly rates by 20–40%. These improvements are reflected in AirDNA projections.
Optimize your AirDNA report — Work with your loan officer to ensure the AirDNA search parameters accurately reflect how you’ll operate the property.
Increase your down payment — Even a 5% bump from 20% to 25% down can significantly improve your DSCR ratio by lowering the monthly payment.
Avoid high-HOA properties — HOA fees count toward your PITIA, reducing the DSCR. Standalone homes without HOAs often produce better ratios.

DSCR Cash-Out Refinance for Existing STR Owners

Already own an Airbnb property? A DSCR cash-out refinance lets you tap into the equity you’ve built — often from both appreciation and the renovations you made to optimize the property for guests.

This is a powerful strategy for portfolio growth: pull cash out of Property A to fund the down payment on Property B, then repeat. Since DSCR loans have no limit on the number of properties, you can scale this approach indefinitely.

Typical cash-out parameters:

Up to 75% LTV (loan-to-value)
Based on current appraised value (including improvements)
Uses actual STR income from your booking history

Frequently Asked Questions

Will the lender require proof that short-term rentals are legal in my area?

Yes. Most DSCR lenders require verification that the property is in a jurisdiction that permits short-term rentals. This typically involves confirming local zoning regulations and any required STR permits or licenses.

Can I use projected income from a property I haven’t set up on Airbnb yet?

Yes — that’s exactly what AirDNA reports are for. The lender uses projected income based on comparable STR properties in the area, so you don’t need existing listings or booking history for a purchase transaction.

Do I need a property management company to qualify?

No. You can self-manage. However, having a property management company or co-host arrangement can strengthen your application if you don’t live near the property.

What happens if my STR income drops after closing?

Nothing changes with your loan. DSCR is calculated once at origination. Your mortgage terms, rate, and payment remain the same regardless of future income fluctuations.

Can I finance a property that I’ll use part-time and rent out part-time?

DSCR loans are for investment properties only — the property cannot be your primary or secondary residence. However, some investors maintain a separate personal vacation property and an STR investment property in the same market.

Ready to Finance Your Short-Term Rental?

Whether you’re buying your first Airbnb cabin in Blue Ridge or refinancing a beachfront condo in Savannah, Integrity Home Lending has the DSCR programs to get it done. We work with multiple wholesale lenders who specialize in STR financing, so we can match you with the best rates and terms available. This makes the DSCR loan short-term rental option ideal for scaling your Airbnb portfolio.

Get Pre-Qualified for STR Financing →

Or call us at 877-445-3631 | Sales@IH-Lending.com

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