Both are DSCR loans qualified on the property’s income — but how that income is measured, the leverage, and the risk profile differ between an Airbnb and a leased rental.
Both a short-term (Airbnb) rental and a long-term leased rental can be financed on the property’s income through a DSCR loan — but the way that income is measured, the leverage, and the risk profile differ. Choosing the right structure starts with understanding how lenders see each one. Here’s the comparison.
The Common Foundation: DSCR
Both structures are, at their core, DSCR loans — they qualify the property on its income against the mortgage payment rather than your personal income, with no tax returns and (with us) no minimum credit score or DSCR. The difference is how that income is established and underwritten.
How Income Is Measured
For a long-term rental, the income is the signed annual lease, or a market-rent estimate from an appraiser. It’s steady and predictable, which makes underwriting straightforward — this is what our standard rental loan is built around. For a short-term rental, there’s usually no annual lease, so we use the property’s projected short-term income (from data platforms like AirDNA) or 12 months of actual booking history. The higher nightly and seasonal rates a strong vacation rental commands count toward qualification — handled through our Airbnb and short-term rental program.
Risk and Variability
A long-term lease produces stable monthly income with low variability. Short-term rental income is higher on average in the right market but swings with seasonality and occupancy. Because of that variability, short-term deals carry a slightly different risk profile — which is why we prefer to see at least a 1.0 DSCR on STR deals, while still reviewing sub-1.0 deals case-by-case.
Leverage and Terms
Both can be 30-year fixed loans with interest-only options and LLC vesting. Long-term rentals often reach the program’s maximum LTV most easily because the income is so steady. Short-term rentals lend up to 80% on a purchase and 75% on a refinance, with the exact leverage tied to the strength and consistency of the STR income.
Compliance
One factor unique to short-term rentals: local rules. Cities and beach towns regulate STRs differently, so part of underwriting is confirming the property can legally operate nightly, plus knowing its fallback long-term rent. A long-term rental rarely faces that hurdle.
Short-Term vs Long-Term Financing at a Glance
Short-Term vs Long-Term Financing at a Glance
Which Should You Choose?
Choose long-term rental financing for a property you’ll lease annually — it’s the simplest case, with the steadiest income and easiest underwriting. Choose short-term rental financing for a property in a genuine vacation or event market where nightly rates clearly beat a long-term lease, and where the property can legally operate as an STR. Many investors hold both, and we finance both — model either with the DSCR loan program.
Frequently Asked Questions
Both use a DSCR loan, but the income is measured differently — a long-term rental uses the lease, while a short-term rental uses projected STR income or booking history. The leverage and risk profile differ slightly too.
Not necessarily, but it’s underwritten with a bit more attention to income variability and local STR rules. We prefer at least a 1.0 DSCR on STR deals and confirm the property can legally operate as a short-term rental.
Yes. We use the property’s projected short-term income (via AirDNA) or 12 months of actual booking history, so the higher nightly and seasonal rates help you qualify rather than being capped at a long-term lease rate.
Both can be 30-year fixed with interest-only options. Long-term rentals often reach maximum LTV most easily thanks to steady income; short-term rentals lend up to 80% on a purchase, tied to the strength of the STR income.