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The rise of short-term rental platforms like Airbnb and VRBO has given everyday homeowners an opportunity to venture into the rental space. However, financing these properties can still be a hurdle.
That’s where short-term rental loans come into the picture. These specialized mortgage programs are designed to help investors purchase properties intended for short-term rentals.
This guide will break down what short-term rental loans are and how to qualify so you can confidently finance your next Airbnb or VRBO property.
Short-term rental loans are mortgages used to purchase properties meant for renting out on a short-term basis, typically through platforms like Airbnb and VRBO. Unlike traditional home loans, short-term rental loans are structured to accommodate the unique cash flow and risk profile of vacation properties.
These loans can be used to:
Lenders typically look for the following when assessing loan applications for short-term rental financing:
| Credit Score | Lenders typically require a minimum score of 620+. |
| Down Payment | At least 15%–25% of the purchase price is typically expected. |
| Rental Income | 6–12 months of rental history may be required to show rental income, though market rent projections may also be acceptable. |
| Cash Reserves | 3–6 months’ worth of mortgage payments in cash reserves may be required to show financial stability. |
| Property Location | Rental properties should ideally be located in areas with strong tourism demand and no restrictions on short-term rentals. |
Lenders often hesitate to finance short-term rentals with traditional mortgages for several reasons:
Given these factors, short-term rental mortgages are typically used to finance these types of investment properties. The following provides a more detailed breakdown of how short-term rental loans compare to traditional mortgages:
| Short-Term Rental Loans | Traditional Mortgages | |
| Purpose | Investment property for short-term rentals | Primary residence or long-term rentals |
| Income Verification | Property’s rental income | Borrower’s personal income |
| Documentation | Cash reserves, rental income history/projected income, & property details | Full income verification required, including tax returns and W-2s |
| Interest Rates | Slightly higher than conventional mortgages | Lower, if borrower qualifies conventionally |
| Down Payment | Typically 15%–25% | As low as 3%–5% |
| Credit Score | Minimum 620+ | Minimum 620+ |
Owning a short-term rental property can come with significant tax perks:
Always consult a tax professional to remain compliant with IRS rules while maximizing your deductions.
While short-term rental loans can be accessible and lucrative, they’re not without their drawbacks:
To boost your odds of loan approval when applying for short-term rental financing, consider the following tips:
Traditional mortgages typically require personal income verification, while short-term rental loans focus on the property’s income potential.
Not always. Many short-term rental loans don’t require tax returns or W-2s. Instead, they rely on the property’s projected or actual rental income.
Most lenders require a minimum credit score of 620, though higher scores can help you secure better terms and lower rates.
Expect to pay 15% to 25% upfront, depending on your situation.
Yes, many short-term rental loan types allow you to purchase or refinance under a business entity.
Yes, many lenders offer cash-out refinance options so you can access your property’s equity to fund renovations or new investments.
Short-term rental loans can close in as little as 2 to 3 weeks, especially if you’re using an experienced mortgage lender.
No, these are specialized loans that not all lenders offer. You’ll need to work with a mortgage company that offers these niche loan programs.
It certainly helps. Getting pre-approved for a short-term rental loan will give you a clear idea of how much you can borrow and will make you seem like a more serious and qualified borrower in the eyes of the seller.
Short-term rental loans add another layer of opportunity for real estate investors, particularly as the vacation rental market becomes increasingly popular. Whether you’re considering a beach home, a downtown condo, or a townhouse close to amusement parks, these loans offer the flexibility and structure you need to close the deal, without having to come up with traditional income documentation.
If you’re looking to buy a short-term vacation property in the Pacific Northwest region and need funding to finance this purchase, we can help. At Sammamish Mortgage, we offer various self-employed mortgage home loan programs for those without traditional employment documentation in WA, OR, ID, CO, and CA. Contact us today to have your mortgage questions answered, or visit our website to get an instant rate quote!
Whether you’re buying a home or ready to refinance, our professionals can help.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.