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Category: Pricing & Revenue
By: James Wu
Reply by Priya Nair:
Mortgage professional and STR investor here. Several options: **Option 1: Conventional refinance using rental income** - Most lenders will count 75% of your Airbnb income (they haircut 25% for vacancy/expenses) - You need: Schedule E from last 2 tax returns showing the rental income - Problem: if you took big depreciation deductions, your Schedule E might show a LOSS even though you're cash-flow positive - Solution: some lenders use a "cash flow analysis" approach instead of Schedule E — they look at actual deposits **Option 2: DSCR refinance** - NO personal income verification at all - Qualification based on: property's rental income ÷ monthly mortgage payment (PITI) - DSCR ratio of 1.0 = income equals payment (break even) - Most lenders want DSCR ≥ 1.25 (income is 125% of payment) - They use 12 months of actual AirDNA data or your booking history - Rates: typically 0.5-1.5% higher than conventional (so maybe 7.0-8.0% currently) - Benefits: doesn't affect your personal DTI, can do unlimited properties, fast close **Option 3: Cash-out refinance** - If your property has appreciated, you can refinance at a higher amount and pull cash out - Use the cash for down payment on next property - Available in both conventional and DSCR formats - Maximum LTV: 75% for investment properties (conventional), 70-75% (DSCR) **For your situation:** If your Airbnb has been operating 18+ months with good income, a DSCR refinance makes the most sense. It keeps the rental income separate from your personal DTI, which preserves your borrowing capacity for future purchases. DSCR lenders for STR: - Kiavi (https://kiavi.com) — fast, digital process - Visio Lending — good rates, STR-experienced - Lima One Capital — flexible terms - Easy Street Capital — specializes in STR DSCR Get quotes from 2-3 lenders. DSCR rates vary much more than conventional because each lender has different risk models.
Reply by David Okafor:
One important thing about using Airbnb income for refinancing: **Fannie Mae updated their guidelines in 2023 to be more STR-friendly.** Previously, you could only use income from long-term leases. Now they allow "reasonably documented rental income" including STR — but with conditions: - Need 12+ months of rental history - Income must be documented (Airbnb 1099, bank statements, or tax returns) - Appraiser may need to provide a "market rent analysis" that includes STR comps This means conventional refinancing with STR income is more accessible than it used to be. Don't assume you need DSCR — get quotes for both and compare total cost. Also: time your refinance strategically. Apply right after your peak season when your trailing 12-month income is highest. Lenders look at the last 12 months, so April-June applications look better than January applications for most markets.
Reply by Chris Nakamura:
Pro tip on cash-out refi for STR investors: I used a cash-out DSCR refinance to pull $65K out of my Gatlinburg cabin (which had appreciated from $340K to $420K). Used that $65K as the down payment on cabin #2. The process: 1. DSCR refi at 75% LTV: $420K × 75% = $315K new loan 2. Paid off old mortgage: $250K 3. Cash out: $65K (minus ~$5K in closing costs = $60K net) 4. Used $60K as 20% down on a $300K property My monthly payment on property #1 went up by about $350/month (higher loan amount) but property #2 generates enough income to cover it plus profit. This is how STR investors scale without saving huge down payments for each property. But be careful — you're increasing leverage and risk with each layer. For tracking the ROI across leveraged properties, Stessa (https://stessa.com) is essential. Shows you the full picture including debt service.