DSCR based off Short term rental income

Investor · Catonsville, MD · Member since 2020 · 81 posts · 41 votes

Hey everyone! Looking for a DSCR loan product based off of short term rental income.

I have a 2 bed 1 bath house in the mountains in PA absolutely beautiful. A comp on the other side of town is 305k. Seller wants something in the neighborhood of 650k for a property that grosses 100k a year. Just hard since it's still a single family home.

I'm looking most at creative financing to buy the house, but thinking about exit strategy/ when it comes time for the balloon payment after 5-7 year term.

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Chris SeveneyBusiness Member

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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

9mo

There is no creative strategy when the borrower wants 2X the value of the property

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Brittany MinocchiBusiness Member
Lender · Massillon, OH · Member since 2022 · 1k+ posts · 486 votes
9mo
Hey Joe -
I think I might have replied to you on FB too earlier today! There are lenders that will use the STR income to determine debt service ratio/market rents, some will even go off of AirDNA projections. You mention a 5-7 year term - is that something your specifically looking for? If not, there are 30-year fixed terms available.
[email protected]330-354-6590
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Vincent JacobbiPro Member
Lender · San Diego, CA · Member since 2023 · 61 posts · 26 votes
9mo
Hey Joe - how much are you looking to put down? Are you thinking it will appraise closer to 305k?
[email protected]716-472-5588
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
9mo
There is no creative strategy when the borrower wants 2X the value of the property
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Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
9mo
Quote from @Joe Stout:

Hey everyone! Looking for a DSCR loan product based off of short term rental income.

I have a 2 bed 1 bath house in the mountains in PA absolutely beautiful. A comp on the other side of town is 305k. Seller wants something in the neighborhood of 650k for a property that grosses 100k a year. Just hard since it's still a single family home.

I'm looking most at creative financing to buy the house, but thinking about exit strategy/ when it comes time for the balloon payment after 5-7 year term.

Hey Joe,
What kind of creative financing are you looking for? Most DSCR lenders will use the sales comparison approach to determine the value of the home. You can use STR income to qualify, however the property must have 12 months income history, or you must have experience owning an STR in the last 12 months. There are some exceptions to this rule but it will depend on some other compensating factors. (credit, experience, reserves, etc..)
[email protected]818-269-7983
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- Joe StoutPro Member
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  Investor · Catonsville, MD · Member since 2020 · 81 posts · 41 votes
  9mo
  Quote from @Erik Estrada:
  
  Quote from @Joe Stout:
  
  Hey everyone! Looking for a DSCR loan product based off of short term rental income.
  
  I have a 2 bed 1 bath house in the mountains in PA absolutely beautiful. A comp on the other side of town is 305k. Seller wants something in the neighborhood of 650k for a property that grosses 100k a year. Just hard since it's still a single family home.
  
  I'm looking most at creative financing to buy the house, but thinking about exit strategy/ when it comes time for the balloon payment after 5-7 year term.
  
  Hey Joe,
  What kind of creative financing are you looking for? Most DSCR lenders will use the sales comparison approach to determine the value of the home. You can use STR income to qualify, however the property must have 12 months income history, or you must have experience owning an STR in the last 12 months. There are some exceptions to this rule but it will depend on some other compensating factors. (credit, experience, reserves, etc..)
  
  This is a fantastic tip! Thank you for explaining. this.
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Stacy RaskinBusiness Member
Lender · Member since 2022 · 1k+ posts · 521 votes
9mo
There are DSCR STR options where AirDNA can be used to structure the loan if an investment property purchase. You mentioned the house being in the mountains and in case the property is marked rural by the appraiser, it will impact whether using AirDNA is an option. Often a rural designation will eliminate loan options or reduce LTV as the lender sees it as a bigger risk since the thinking goes that it will be harder to resale the property if in a rural area if the lender has to foreclose. Also, many investors go with a 30 year fixed DSCR option, not a 5-7 year balloon payment if we are discussing 1-4 unit or 5-8 unit DSCR programs. There are different programs depending on the amount of units, etc. Happy to connect to discuss further.
[email protected]818-770-0340
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Matthew Bernal
Investor · Austin, TX · Member since 2021 · 497 posts · 127 votes
9mo
Interesting deal. On STR DSCR, most lenders are still going to anchor heavily to residential comps since it's a 2/1 SFR, even with strong income. That gap between comp value and income price is usually where things get tricky.

Quick question — are you seeing that $100k gross supported by a couple years of STR history, or is it more of a pro forma based on similar properties?
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Bo SmithPro Member
Hinton, WV · Member since 2026 · 1k+ posts · 375 votes
8mo
Most lenders want 12+ months of actual STR income history, but there's a workaround - use market rent comps for the property type in your area. Some portfolio lenders will accept projected STR income if you show solid comps from Airbnb/VRBO for similar properties. Have you tried presenting it as investment property income vs trying to get them to understand STR specifically?
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Christine LeonardBusiness Member
Real Estate Agent · Annapolis, MD · Member since 2026 · 16 posts · 4 votes
7mo
In 2024, I did a DCSR loan for a STR in the Poconos - it's doing pretty well! We worked with the Mortgage Shop and the property has appreciated in this short time.
[email protected]443-223-4193
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Brian Bowman
Lender · Nationwide · Member since 2025 · 17 posts · 1 vote
4d
For anyone searching "DSCR loan for short-term rental" and landing here, the key thing this deal shows: STR income can qualify you, but it doesn't set the value.
How STR DSCR loans actually work:
- Income. Lenders count STR income one of three ways: actual 12-month history (Airbnb/VRBO statements), a projection from a tool like AirDNA, or a 1007 from the appraiser using STR rents. Which one they use can swing your ratio a lot, so ask up front.
- Value. The loan amount is based on the appraisal, and a single-family STR almost always appraises off sales comps, not income. A $100K gross doesn't make a $305K house worth $650K to a lender.
So on a deal like this, every dollar above the appraised value comes out of your pocket, and the balloon exit has the same problem in 5-7 years. You'd be refinancing into a loan based on what the house appraises for then, not what you paid.
The STR deals that work best on DSCR are the ones bought near appraised value, where the strong income just makes the ratio easy.
Disclosure: I'm a DSCR/hard money broker with DSCR Kings.
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