Using Projected Airbnb Income to Qualify for a Loan

Have you found the perfect Airbnb investment property, only to be told by a traditional bank that your projected rental income doesn't count? You're not alone. Thousands of savvy real estate investors face this roadblock daily. Traditional lenders don't understand that your vacation rental can generate significantly more income than a typical long-term rental.

The good news? There's a different financing type for investors like you. You can secure an Airbnb income loan by focusing on the property's cash flow potential, not your personal W-2 income or tax returns. This approach recognizes that the property's ability to generate rental income is what matters for investment property success.

At theLender, we specialize in financing for real estate investors who think beyond traditional boundaries. We don't just accept projected Airbnb income; we've perfected the process of using it to qualify you for a loan. Since 2019, we've funded over $3 billion in investment property loans using these methods. This guide will show you how it works, walking you through our income calculation methods and explaining why your next investment doesn't have to be limited by outdated lending rules.

What is an "Airbnb Income Loan"?

Let's clarify "airbnb income loan." This isn't a formal product name at your local bank. It's a term investors use to describe a DSCR (Debt Service Coverage Ratio) loan for short-term rental properties like Airbnb and VRBO investments.

DSCR loans represent a fundamentally different approach to qualifying borrowers. Instead of analyzing personal income, employment history, and debt-to-income ratios, we focus entirely on the property's rental income. The concept is simple and aligns with investors' thinking: If the rental income covers or exceeds the mortgage payment, the property qualifies for financing. This method replaces the need for personal Debt-to-Income (DTI) calculations, W-2s, or tax returns.

DSCR Formula:

DSCR = Gross Monthly Rental Income / Monthly PITI (Principal, Interest, Taxes, Insurance)

Example: If your property generates $5,000 monthly in rental income and the total monthly payment (PITI) is $4,000, your DSCR is 1.25. This means the property generates 25% more income than its expenses. Most programs at theLender look for a DSCR of 1.0 or greater, though many investors achieve higher ratios with successful short-term rental strategies.

This approach transforms the lending conversation. Instead of explaining why your tax returns don't reflect your true earning potential or why your self-employed income varies, you demonstrate that the property cash flows. We qualify the property, not your personal finances, which is how DSCR loans and no income verification loans work for serious real estate investors.

Why Traditional Lenders Can't Handle STR Income

Understanding why traditional banks struggle with short-term rental financing explains why specialized lenders like theLender are essential for today's investors. The problem isn't that banks don't want your business. It's that their system is built around guidelines that don't accommodate vacation rental loans and STR financing.

The documentation problem runs deep in traditional lending. Big banks operate within Fannie Mae and Freddie Mac guidelines, designed for homeowners with steady W-2 employment. These guidelines require stable, documented income sources verified through tax returns, pay stubs, and employment letters. When projecting income from a property you haven't purchased yet, or when your existing Airbnb generates variable monthly income, traditional underwriters lack a framework to evaluate that income stream.

Traditional lenders view the variability that makes short-term rentals profitable, such as higher rates during peak seasons, premium pricing during local events, and the ability to adjust rates based on demand, as inconsistent and risky. A property generating $8,000 in summer and $3,000 in slower months doesn't fit into their rigid income calculations, even when the annual total exceeds a long-term rental.

Traditional lenders are trying to fit an investment property (a business asset) into a personal homeowner's loan model. This creates a disconnect between how they evaluate the loan and how you, as an investor, evaluate the deal. They're focused on your ability to make payments from your personal income, while you're focused on the property's ability to generate enough rental income to service the debt and provide positive cash flow.

3 Ways To Calculate Your Airbnb Income

We've developed three flexible and innovative ways to determine your property's rental potential, recognizing the limitations of outdated methods. This ensures we use the strongest income figure to qualify your loan, giving you the best chance at approval while maintaining responsible lending standards.

Method 1: The Appraiser-Driven 1007 Form with STR Market Rents

The Form 1007 (Single-Family Comparable Rent Schedule) is a standard appraisal tool most lenders use to determine rental income potential. However, most lenders instruct their appraisers to research long-term rental comparables, which are properties rented on annual leases to traditional tenants.

TheLender takes a different approach. We instruct our appraisers to analyze and project short-term market rents for your property. Instead of looking at similar properties' annual leases, the appraiser researches what comparable properties in your area earn as vacation rentals. This provides a professional, appraisal-backed income figure tailored to the property's intended use as a short-term rental.

This method is valuable because it provides an official, defensible income projection for the property's appraisal report. The appraiser considers factors like location, proximity to attractions, property amenities, and local short-term rental market conditions to arrive at a realistic income projection. This analysis reveals income potential that exceeds traditional projections, unlocking financing that wouldn't be possible through conventional methods.

Method 2: The Data-Powered AirDNA Report

We can qualify your loan using a 12-month projected income report from AirDNA, a leading short-term rental market data provider, for data-driven investors. AirDNA analyzes millions of Airbnb and VRBO listings to provide market insights, revenue projections, and performance metrics for specific properties and neighborhoods.

This method is popular with investors who have done their due diligence using data analytics. If you've researched your target market using AirDNA or similar platforms, we can use that data to qualify your AirDNA report for mortgage approval. The process is straightforward: AirDNA provides a detailed revenue projection based on comparable properties, seasonal trends, and local market dynamics.

Our underwriting team has developed specific guidelines for using AirDNA reports that demonstrate our expertise and conservative approach:

• Requirement 1: To arrive at the gross qualifying income, we apply a conservative 20% expense factor to the annualized 12-month revenue projection. This accounts for variable expenses, seasonal fluctuations, and ensures a margin of safety.
• Requirement 2: The subject property's market must have a minimum AirDNA "Market Score" of 60, indicating sufficient market data and rental activity for reliable projections. This is our standard requirement, and exceptions can be considered on a case-by-case basis.

This data-powered STR financing approach provides transparency and confidence for both borrowers and lenders. You can see how the income projection was calculated, and we can underwrite the loan based on comprehensive market data rather than subjective estimates.

Method 3: The Simplified Alternative STR Market Rental Analysis

Our third method represents an innovative, proprietary solution developed by theLender to streamline the qualification process while maintaining accuracy. It uses a simplified analysis by the appraiser using a standardized form from our Appraisal Management Company (AMC).

The appraiser needs to research comparable short-term rental properties and report two metrics: the average daily rental rate and typical occupancy percentage for similar properties in the same market area, instead of a full Form 1007 with detailed property information. This approach removes administrative complexity while capturing the essential data needed to project rental income.

This method offers faster turnaround times and reduced complexity for appraisers, expediting your loan approval process. By focusing on key metrics driving short-term rental revenue such as daily rates and occupancy, we can quickly establish realistic income projections without excessive documentation. This method has succeeded in markets nationwide and represents our commitment to innovation in STR financing.

From "No" at the Bank to "Yes" at theLender

Let's examine a real-world example of our process. Meet Sarah, a self-employed graphic designer looking to buy her first investment property in Scottsdale, Arizona, which is a popular vacation destination with strong short-term rental demand. Sarah found a perfect property listed at $600,000, located minutes from top golf courses and hiking trails that attract visitors year-round.

Despite Sarah's excellent credit score and substantial down payment, her traditional bank denied her loan application. The issue wasn't her creditworthiness or capital; it was their inability to recognize the property's Airbnb income potential. The bank's underwriter only looked at Sarah's tax returns, which didn't reflect the cash flow needed to meet their strict DTI requirements. They ignored the AirDNA data Sarah had compiled showing strong rental performance in the neighborhood.

Sarah came to theLender, and we saw the opportunity her traditional bank missed. We ordered an AirDNA report for mortgage qualification, projecting $80,000 in annual revenue based on comparable properties. Applying our conservative 20% expense factor, we used $64,000 per year (or $5,333 per month) as the qualifying income for underwriting.

Sarah's loan amount and down payment made her new PITI (Principal, Interest, Taxes, Insurance) $3,900 per month. This gave her a DSCR of 1.36 ($5,333 ÷ $3,900), above our minimum requirements. The loan was approved within days without W-2s, tax returns, or employment verification required. Sarah closed in under 30 days and began generating rental income immediately, validating our confidence in the property's cash flow potential.

Why Investors Choose theLender for STR Financing

Qualifying with STR income is just the beginning. Our platform is built to help investors scale their portfolios, with features designed to remove common obstacles limiting growth:

• First-Time Investors Welcome: Unlike many lenders, we don't require previous landlord experience on most programs. We understand everyone starts somewhere, and a great property with strong cash flow potential is more important than years of experience managing traditional rentals.
• Flexible Vesting: Take title in your name or vest in an entity like an LLC, S-corp, or trust for asset protection and tax benefits. We allow layered LLC structures for sophisticated investors with complex ownership arrangements.
• No Seasoning on Cash-Outs: You can refinance and pull cash out of a property immediately after purchase with no waiting period. This allows quick access to equity for your next investment without delays.
• High LTVs: Get up to 85% Loan-to-Value on purchases, preserving capital for more deals while accessing financing for quality properties.
• Scale Your Portfolio: Finance a single property or use our 'theBlanket' portfolio loan program to cover up to 25 properties in one transaction, simplifying the financing process as you grow.
• ADU Income Accepted: We recognize the value of Accessory Dwelling Units and will include income from up to 3 ADUs on a single property, maximizing your qualifying income potential.
• No Sourcing of Large Deposits: We understand how investors move capital between deals, accounts, and partnerships. We don't require extensive sourcing or seasoning documentation for large deposits in your accounts.

These features create a lending experience designed for investment property financing instead of forcing investment deals into homeowner-focused loan programs.

What If the Projections Come in Low?

Initial appraisals or income projections don't always capture a property's full potential. Market conditions, appraiser unfamiliarity with local STR markets, or incomplete data can result in conservative projections. Rather than treating this as a dead end, we developed a comprehensive rebuttal process to demonstrate your property's true income potential.

Our rebuttal process offers multiple pathways to improve your initial results. First, you can submit additional, relevant comparable properties for the appraiser to consider. If you've identified superior comparables or have access to rental data not included in the original analysis, we'll work with the appraiser to incorporate it. Second, if the initial analysis seems fundamentally flawed or incomplete, we can order a new 1007 from a different appraiser familiar with your local short-term rental market.

Our policy is to use the highest valid figure from the original report and any subsequent rebuttals or new reports. This ensures the best chance at qualification while maintaining our underwriting standards. We're not trying to decline your loan; we are working as your partner to make your deal work.

3 Steps to Securing an Airbnb Income Loan

We've streamlined our process to be fast and efficient while maintaining the personalized service that complex investment deals require. You can close in as little as 30 days, which is often faster than traditional lenders specializing in investment properties, with a single point of contact.

1. Submit Your Property Info: Click "Get Pre-Approved in 24 Hours" and provide basic details about you and the investment property. This step takes a few minutes and gives us what we need to evaluate your scenario and provide initial feedback.
2. Get Your Loan Estimate: Your loan officer will personally review your scenario, discuss the best income calculation method for your property, and provide a detailed loan estimate. This happens within 24 hours of your application, allowing you to move quickly on time-sensitive opportunities.
3. Upload Documents & Close: Use our secure online portal to upload the required property and entity documents. We'll handle the appraisal coordination and title work, guiding you through each step for a fast and smooth closing experience.

You'll work with loan officers who specialize in DSCR loans and understand short-term rental investing. We speak your language and understand your business model, making the experience more efficient and less frustrating than traditional lending channels.

Conclusion

Traditional lending rules shouldn't limit your investment ambitions or force you to miss opportunities while waiting for your tax returns to "catch up" with your actual earnings. The key to successful real estate investing is partnering with a lender that understands real estate investing rather than applying homeowner-focused lending criteria to investment strategies.

TheLender has the expertise, experience, and specialized products to make your next Airbnb income loan a reality, with over $3 billion in DSCR loans funded since 2019. Our flagship NONI (No Income) program and other investment-focused loan products have helped thousands of investors build wealth through real estate, regardless of their personal tax returns or employment status.

FAQ

Can I use an Airbnb income loan for a primary residence or second home?

No. All our DSCR loan programs, including those for short-term rentals, are exclusively for business-purpose investment properties. The property cannot be owner-occupied during the loan term. This restriction ensures compliance with investor loan regulations and allows us to offer flexible underwriting terms attractive to real estate investors.

Is a personal guarantee required for the loan?

Yes. All our loans are full recourse and require a personal guarantee from the primary principals, typically defined as individuals or entities with 25% or more ownership in the borrowing entity. This means that while you can take title in an LLC or other entity for asset protection and tax benefits, you will still be personally responsible for loan performance.

What is the minimum credit score for an STR loan?

Our credit score requirements are flexible and depend on the program, loan-to-value ratio, and DSCR of your deal. We use the highest mid-FICO score among all borrowers, which can help you qualify for better terms if you are borrowing with a partner or spouse with stronger credit. Instead of a blanket minimum score, we evaluate each scenario individually. Contact us for a specific review of your situation.

Do you offer loans in all 50 states?

We lend in most U.S. states and are expanding our footprint. Currently, we don't offer loans in Utah, Nevada, Puerto Rico, Guam, or the U.S. Virgin Islands. If you're investing in any other state, we can help you secure financing for your short-term rental property.

Are there lender fees?

We advertise "NO LENDER FEES" on many products, saving you money at closing compared to lenders who charge origination, processing, underwriting, and other junk fees that add to your costs. This policy reflects our commitment to transparent pricing and investor-friendly terms that maximize your return on investment.