DSCR Loans for Short-Term Rentals: What Investors Need to Know in 2026
Short-term rentals are exploding, but most traditional lenders still don't know how to underwrite Airbnb/VRBO income — and many banks simply won't touch them.
That's where DSCR loans step in.
A DSCR loan uses the property's income — not your tax returns, W-2s, or debt-to-income ratio — to qualify. Perfect for investors scaling quickly, juggling multiple loans, or writing off heavy expenses.
And yes… they work beautifully for Airbnbs.
You just need to know how lenders calculate DSCR for short-term rentals, because it's very different from long-term rentals.
Let's break it down in plain English.
How DSCR Is Calculated for Short-Term Rentals
The core formula stays the same:
DSCR = Monthly Rental Income ÷ Monthly Payment (PITIA)
But here's the twist:
Short-term rentals have unique rules depending on the lender.
Lenders typically use one of three methods:
① Market Rent (Form 1007 / Long-Term Rent Projection)
The appraiser gives a long-term market rent number.
- ✔Easiest
- ❌Often undervalues STR income
- ✔Works for most lenders
- ❌Tough on high-earning Airbnbs
② Short-Term Rental Schedule / AirDNA-Based Income
Some lenders allow the appraiser to provide a Short-Term Rental Schedule based on STR comps.
- ✔Much closer to actual Airbnb income
- ✔Usually produces the highest DSCR
- ❌Only certain lenders allow it
- ✔Great for high-occupancy areas
③ Actual Historical STR Income (12–24 months)
If the home is already operating as an STR:
- ✔Uses your real performance
- ✔Best for seasoned investors
- ❌Requires 12–24 months of data
- ✔Ideal for refinancing high-cashflow homes
Rockhouse works with multiple wholesale lenders — so we match the best method to your property instead of forcing you into one box.
What DSCR Do Lenders Want on STRs?
Most lenders like DSCR ≥ 1.00, but STRs are flexible.
Typical ranges:
- •≥1.00: Best pricing and easiest approval
- •0.75–0.99: Still doable with some lenders
- •0.50–0.75: Case-by-case
- •Negative DSCR: Rare exceptions → we'd pivot to a different product
No approval is guaranteed — but STRs often cashflow high enough that they qualify easily.
Property Types That Work Well for DSCR Airbnb Loans
- •Single-family homes
- •Townhomes
- •Condos (including many non-warrantable)
- •2–4 units
- •Vacation markets
- •Out-of-state properties
- •New STR conversions
If it cashflows, it's usually financeable.
Common Airbnb/VRBO DSCR Loan Overlays (The "Gotchas")
1. Seasonality Adjustments
Beach, lake, and mountain markets sometimes get income averaged, lowering DSCR.
Rockhouse solves this by:
- •Picking lenders that allow STR schedules
- •Using actual historical income if available
- •Comparing multiple appraisers who understand STR markets
2. Appraisers Who Don't Understand STRs
If the appraiser lowballs rent, the DSCR falls apart.
We proactively request appraisers with STR experience — this alone saves deals.
3. HOA Restrictions
Some condos restrict short-term rentals.
We pre-screen HOAs so you don't waste time or EMD.
4. First-Time STR Investors
Some lenders require experience — others don't.
We place you with the right one.
5. Prepayment Penalties
Most DSCR loans include them (because they're business-purpose loans).
We help you choose the right structure based on your exit plan.
Example Scenario (Realistic, Not Guaranteed)
- Property:3-bed cabin in the Shenandoah area
- Purchase Price:$520,000
- Projected STR income (STR schedule):$6,200/mo
- PITIA:$4,450/mo
- DSCR:1.39
Outcome: Solid approval path with multiple lenders; one allowed STR schedule, another allowed actual AirDNA performance.
With a traditional bank? Declined immediately because it's a short-term rental.
With DSCR? The deal flies.
Who This Loan Is Perfect For
- •Full-time Airbnb/STR investors
- •New investors starting their first STR
- •Buyers using platforms like Airbnb, VRBO, or Furnished Finder
- •Out-of-state investors wanting fast closings
- •Borrowers with complex tax returns or heavy write-offs
- •Anyone scaling a portfolio faster than conventional limits allow
How to Get Started (Fastest Path)
If you want me to run your numbers, compare multiple wholesale lenders, and structure your STR loan correctly:
Ready to See If You Qualify?
Whether you're buying, refinancing, or just exploring options, I'll give you a clear plan without any pressure.
Compliance
Rockhouse Mortgage, LLC | NMLS #2469785
Licensed by the Virginia State Corporation Commission (SCC) Bureau of Financial Institutions.
Equal Housing Lender.
This article is for educational purposes only and not a commitment to lend. All loans subject to credit and underwriting approval. No APRs or interest rates are quoted here.