INVESTORS

Financing a Short-Term Rental (From Someone Who Owns Two)

Reviewed by Susan Pryor, Licensed Mortgage Loan Originator, NMLS #157369 — Updated August 2026

Last updated: August 2026

Key Takeaways

Conventional loans generally won’t count short-term rental income until you have two years of tax returns showing it — a problem when you’re buying.
A DSCR approach uses projected income from market data services; 80% of the projection is the qualifying rent figure.
Before you buy: check HOA restrictions, local permit rules, management costs, and seasonality.
Susan owns a beach house and a lake house in the Airbnb pool — this is firsthand, not theory.

Susan owns a beach house and a lake house in the Airbnb pool — this is firsthand, not theory

Susan didn’t get into short-term rentals until a few years ago. Now there’s a beach house and a lake house in the Airbnb pool, and it’s been a different experience from long-term rentals — in mostly good ways. The financing side is where most people run into problems.

The problem with conventional financing

Most conventional loans won’t let you use short-term rental income to qualify until you have two years of tax returns showing that income. If you’re buying a new short-term rental — or refinancing one you haven’t owned long enough — you’re stuck.

How the DSCR approach solves it

Data services analyze what a specific property can be expected to earn on Airbnb or VRBO based on location, size, and comparable properties. We take 80% of that projected income as the qualifying rent figure — one adjustment, applied once — and if that number covers the payment, the loan can work. No W-2. No two years of rental history. The property, the market data, and your credit.

Before you buy — the checklist

HOA restrictions

Many communities limit or ban short-term rentals. Verify before you make an offer.

Local regulations

Some cities and counties have permit requirements or caps. Check your specific market.

Management

Self-managing an STR is a different commitment than a long-term tenant — factor in your time or a management company’s cost.

Seasonality

Projected income varies significantly by property type and location. Run conservative numbers.

Repairs

Costs have gone up across the board — build a repair budget into your numbers, and build relationships with contractors you trust.

FAQ

Common Questions

Yes, through a DSCR loan. Market data services project the property’s short-term income; 80% of that projection is the qualifying figure.

Plan on 20–30% for a DSCR purchase, depending on the property and your profile.

HOA and local restrictions discovered after the offer. Check both before you write anything.

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About Southern Mortgage Authority — Susan Pryor, Branch Manager | Licensed Mortgage Loan Originator, NMLS #157369, has served 6,000+ clients over 25 years. Based in Marietta, GA and licensed in 13 states. Call 678-712-2063 or send us a message.

Susan Pryor NMLS #157369 | Ark-La-Tex Financial Services, LLC NMLS #2143 d/b/a Benchmark Mortgage | Equal Housing Lender. Not a commitment to lend. All loans subject to credit approval.