How do lenders count Airbnb income?

Question

Anyone aware of the ins and outs of how Fannie Mae-backed conventional lenders count income from Airbnbs? Specifically, my question is whether you can acquire a short-term rental, then immediately turn around and use the income from it to qualify to purchase another property. With conventional long-term rentals, if you're an established landlord, lenders will count the income from a new rental property right away, allowing you to use it to qualify to purchase another. Say you purchased a property that makes $500 a month in May 2024, and now it's August 2024 and you want the lender to count that income--they'll count $6k, not just $1500, with no need to see your taxes. Does it work that way for short-term rentals too? Or are the lenders wanting to see a full year of them on your taxes before they'll count the income?

Jay Hurst · Answer

@Mike Day  For Fannie/Freddie if the property is not on the tax returns (because of when it was purchased) you use 75% of the long term lease amount. If you renting it short term you do not have that long term lease to show so you cannot use income from that property. BUT, if buying a new investment property you can use 75% of the appraiser determination of the new property.

If on the tax return, you can use short term rental income OR long term income. This form is used to calculate the income: Rental income worksheet

Patrick Roberts · Answer

For conventional, the rental income for a property being placed into service will be 75% of the gross rent as an LTR. I'm not aware of any way to replace that metric with STR income. Typically for conventional, you would need the STR income on the sched E to be able to use it going forward. DSCRs are the go-to if you want to use STR income.

Robin Simon · Answer

I believe this is correct - doable but very challenging to qualify STR with conventional in a high-rate environment like we've been in.

Sharing this article published last year on STR Loans Options Pros/Cons, etc if it helps!

https://www.biggerpockets.com/blog/short-term-rental-loans-a...

Patrick Roberts · Answer

Yeah - I closed a conventional cashout refi on an STR property earlier this year. It was a fight for sure, but we were able to use the STR income because we had good history of it on Schedule E. DTI was also fine because the LTV was low and the borrower had an entire portfolio for income. This wouldnt work for a new STR being placed into service - I'm not aware of any way to use the potential STR income in DTI with Conventional for a property being purchased.

How do lenders count Airbnb income?

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