Which one would be better DSCR Loan or Second home/Vacation home loan ?

[Kaylin Gonzalez]

Looking into purchasing a vacation home and i just learned about different types of financing products and I'm curious what is the different between DSCR loan v second home/vacation home loan ?

[Zach Edelman]

DSCR loan is qualified primarily on the cashflow of the asset. For an STR, the lender, assuming they are STR friendly, would likely use AirDNA projections, historicals from the seller (if they exist), or an STR 1007 market rent schedule to qualify the rents. They are purely for investment purpose and will require you to sign a non-owner occupancy affidavit at closing stating you don't plan to occupy the property for more than 14 days out of the year.

A second home loan is as it sounds, a loan for a property that you will use as a second home, and live in. Rules for this loan product require that the property is rented no ore than 180 days per year or generally half the time. This loan will be qualified on DTI/Tax Returns.