Creative Financing for Airbnb in Northern Virginia
Investor · Alexandria, VA · Member since 2023 · 92 posts · 52 votes
Creative Financing for Airbnb in Northern Virginia
Most Popular Reply
Jay HurstBusiness Member
Lender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votesQuote from @David Cherkowsky:
Hi all, I'm interested in thoughts on creative financing options for an Airbnb in Northern Virginia. A property is available off market that seems to be a great deal. I am interested in living in the basement, and renting out the upper unit on Airbnb. The property is likely a little too expensive for me to qualify for with a conventional loan based on DTI. However, I'm wondering if anyone has thoughts on creative financing. Maybe a DSCR loan? Any thoughts would be appreciated.
@David Cherkowsky The above is absolutely correct, BUT do not assume you cannot qualify for a conventional loan. Make sure a competent LO with a NMLS number runs the numbers from you. My team has conversations all the time with borrowers, especially those that own real estate, that thing DSCR options are their ONLY options. But, guess what they are not loan officers or underwriters so they turn out to be wrong. (do not trust me to build the house, but I do know how to qualify you FOR the house.) Don't disqualify yourself without talking to an expert.
Hurst Real Estate, INC4.989 Reviews
6 Replies
- 1ySasha MohammedPro MemberLender · Costa Mesa, CA · Member since 2018 · 337 posts · 245 votes
Hi David,
There are lenders that will allow you to purchase via a DSCR loan using STR income to qualify. However, they will not allow you to live in the property at all, full stop.
This is because DSCR loans do not follow/ pass consumer protection laws. when you live in the property, it creates massive problems for this loan type and the lender which would issue it to you.
For that reason, most of these lenders want to ensure you OWN your primary residence. Some will let you rent your primary and still do a DSCR loan on the subject, however, this would come with the added scrutiny of really documenting and evidencing you have no intention of moving in to the subject.
- 1yJay HurstBusiness MemberLender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
Quote from @David Cherkowsky:
Hi all, I'm interested in thoughts on creative financing options for an Airbnb in Northern Virginia. A property is available off market that seems to be a great deal. I am interested in living in the basement, and renting out the upper unit on Airbnb. The property is likely a little too expensive for me to qualify for with a conventional loan based on DTI. However, I'm wondering if anyone has thoughts on creative financing. Maybe a DSCR loan? Any thoughts would be appreciated.
@David Cherkowsky The above is absolutely correct, BUT do not assume you cannot qualify for a conventional loan. Make sure a competent LO with a NMLS number runs the numbers from you. My team has conversations all the time with borrowers, especially those that own real estate, that thing DSCR options are their ONLY options. But, guess what they are not loan officers or underwriters so they turn out to be wrong. (do not trust me to build the house, but I do know how to qualify you FOR the house.) Don't disqualify yourself without talking to an expert.
Hurst Real Estate, INC4.989 Reviews - Lender · Nashville, TN · Member since 2024 · 700 posts · 284 votes1y
If you are going to get a DSCR loan, you cannot live in the home, end of story.
There's plenty of qualified LO's around here who's job it is to find the best product for you.
- Investor · Alexandria, VA · Member since 2023 · 92 posts · 52 votes1y
Quote from @Sasha Mohammed:
Hi David,
There are lenders that will allow you to purchase via a DSCR loan using STR income to qualify. However, they will not allow you to live in the property at all, full stop.
This is because DSCR loans do not follow/ pass consumer protection laws. when you live in the property, it creates massive problems for this loan type and the lender which would issue it to you.
For that reason, most of these lenders want to ensure you OWN your primary residence. Some will let you rent your primary and still do a DSCR loan on the subject, however, this would come with the added scrutiny of really documenting and evidencing you have no intention of moving in to the subject.
Thanks Sasha. So I guess one option could be to do a DSCR loan, Airbnb the property in full, and then in the future, refinance into a conventional when my DTI allows me to down the road. For the property I'm considering, I think another year or so would allow me to qualify for a conventional.
- Investor · Alexandria, VA · Member since 2023 · 92 posts · 52 votes1y
Quote from @Jay Hurst:
Quote from @David Cherkowsky:
Hi all, I'm interested in thoughts on creative financing options for an Airbnb in Northern Virginia. A property is available off market that seems to be a great deal. I am interested in living in the basement, and renting out the upper unit on Airbnb. The property is likely a little too expensive for me to qualify for with a conventional loan based on DTI. However, I'm wondering if anyone has thoughts on creative financing. Maybe a DSCR loan? Any thoughts would be appreciated.
@David Cherkowsky The above is absolutely correct, BUT do not assume you cannot qualify for a conventional loan. Make sure a competent LO with a NMLS number runs the numbers from you. My team has conversations all the time with borrowers, especially those that own real estate, that thing DSCR options are their ONLY options. But, guess what they are not loan officers or underwriters so they turn out to be wrong. (do not trust me to build the house, but I do know how to qualify you FOR the house.) Don't disqualify yourself without talking to an expert.
Thanks for the response Jay. Just sent you a message.
- 1ySasha MohammedPro MemberLender · Costa Mesa, CA · Member since 2018 · 337 posts · 245 votes
Quote from @David Cherkowsky:
Quote from @Sasha Mohammed:
Hi David,
There are lenders that will allow you to purchase via a DSCR loan using STR income to qualify. However, they will not allow you to live in the property at all, full stop.
This is because DSCR loans do not follow/ pass consumer protection laws. when you live in the property, it creates massive problems for this loan type and the lender which would issue it to you.
For that reason, most of these lenders want to ensure you OWN your primary residence. Some will let you rent your primary and still do a DSCR loan on the subject, however, this would come with the added scrutiny of really documenting and evidencing you have no intention of moving in to the subject.
Thanks Sasha. So I guess one option could be to do a DSCR loan, Airbnb the property in full, and then in the future, refinance into a conventional when my DTI allows me to down the road. For the property I'm considering, I think another year or so would allow me to qualify for a conventional.
Yes! but i also 2nd @Jay Hurst's sentiments - get a 2nd or even 3rd opinion on DTI/ full doc. i personally love files that are puzzles, i get some weird satisfaction out of figuring out how to make it work on full-doc, especially when my client has been told "no" before. if it doesn't work now, a good loan professional will help you create a path forward. BOL!
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