Investors finance short-term rentals with DSCR loans, conventional second-home or investment loans, bridge or hard money loans, and portfolio loans.
Real estate investors finance short-term rentals (STRs) with four main loan types: DSCR loans that qualify on the property's rental income, conventional investment-property loans that qualify on personal income, bridge or hard money loans for properties that need work first, and portfolio loans for several properties at once. For most investors holding an Airbnb or vacation rental in an LLC, a DSCR loan is the long-term answer.
The choice depends on three things: whether the property is ready to rent, how you'll prove income, and whether local rules allow short-term rentals at that address.
Key takeaways
- DSCR loan: qualifies on STR income or market rent, no personal income documents, LLC-friendly.
- Conventional loan: lower rates for borrowers with strong documented income, but stricter on property count, entities and second-home use.
- Bridge or hard money: buy and renovate or furnish fast, then refinance once it earns.
- Check local law first. Many cities require an STR permit or license, and some limit STRs to primary residences.
Short-term rental loan options compared
| Option | Qualifies on | Best for | Watch out for |
|---|---|---|---|
| DSCR loan | Property income (bookings, projection or market rent) | Stabilized STRs held in an LLC; self-employed investors | Lender's choice of income method; higher rate than conventional |
| Conventional investment loan | Personal income and debt-to-income | W-2 borrowers with few properties | Documentation; limits on financed properties |
| Second-home loan | Personal income | A home you use yourself and rent occasionally | Occupancy and rental-management restrictions |
| Bridge / hard money | The property and the exit | Properties that need renovation or furnishing | Short term; plan the refinance from day one |
| Portfolio / blanket loan | Combined portfolio income | Several STRs refinanced together | Cross-collateralization and release terms |
How do DSCR loans work for short-term rentals?
A DSCR loan divides the property's monthly income by the full payment (principal, interest, taxes, insurance and HOA). For STRs, lenders typically use one of three income figures: trailing 12 months of booking income from the platform or a property manager, a projection from short-term rental market data, or long-term market rent from the appraiser's rent schedule. The last is the most conservative and the most widely accepted. A property that only works at peak-season nightly rates is a weak DSCR file. Read the details in DSCR loans for short-term rentals and the basics in DSCR loans explained, then test your numbers with the DSCR calculator.
Can you use a second-home loan for an Airbnb?
Only if it's genuinely a second home. Fannie Mae's occupancy rules (Selling Guide B2-1.1-01) say a second home must be occupied by the borrower for some portion of the year, must not be rental property or a timeshare, and can't be subject to agreements that give a management firm control over its occupancy. A property you'll rent full-time is an investment property and should be financed as one — misstating occupancy on a mortgage application is a serious problem.
When does a bridge or hard money loan make sense?
When the property can't earn yet: it needs renovation, a pool or hot tub, permits, or furniture before the first booking. A short-term loan funds the purchase and improvements; once the property has bookings or a supportable projection, you refinance into a DSCR loan. Ambition Lending's fix and flip and rehab loans fund up to 90% of the purchase and up to 100% of the rehab (capped at 75% of ARV), and our bridge loans go to 75% of value. See also rehab-to-rent (BRRRR) loans.
What do lenders check on an STR besides income?
- Legality. Permit or license status, zoning and any primary-residence rule. Phoenix has required a short-term rental permit since November 6, 2023; Baltimore licenses only a host's principal residence, deeded to an individual; and Los Angeles home-sharing must be the host's primary residence. See the local notes in our Phoenix, Baltimore and Los Angeles guides.
- HOA and condo rules. Many associations ban rentals under 30 days. See financing condos and townhomes.
- Insurance written for short-term rental use, not a standard landlord policy.
- Operating expenses: cleaning, platform fees, utilities, supplies, management and occupancy taxes.
- A backup plan. Would the property still cover its payment as a long-term rental if rules change?
How to choose
- Confirm the address can legally operate as a short-term rental.
- If it needs work, start with a bridge or rehab loan and plan the refinance.
- If it's ready and you'll hold it in an LLC, compare DSCR terms using the most conservative income figure.
- If you have high documented income and want the lowest rate, price a conventional investment loan too.
Ambition Lending's short-term rental financing covers purchases and refinances, from $100,000 with no fixed maximum, in metro, suburban and rural markets. Send the address and your income support for a term sheet within 24 hours on most requests.
Frequently asked questions
What is the best loan for a short-term rental?
Usually a DSCR loan for a stabilized STR held in an LLC; a bridge loan if it needs work first; a conventional loan for W-2 borrowers with strong income.
Can you get a DSCR loan on an Airbnb?
Often. Lenders use booking history, a market projection or long-term market rent, and confirm the STR is legal.
Can I use a second-home mortgage for an Airbnb?
Only for a true second home you occupy part of the year. A full-time rental needs an investment-property loan.
Do short-term rentals need a permit?
In many cities, yes. Phoenix requires a permit; Baltimore and Los Angeles limit STRs to the host's primary residence. Lenders check.
Can I finance furniture and setup costs?
Not usually inside a DSCR loan. Use cash or a bridge loan's renovation budget, then refinance.
