What Is the Best Loan to Buy an Airbnb?
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Not all short term rental loans are created equal.

Choosing the right loan can make or break your returns. The structure of your financing affects your down payment, cash flow, scalability, and even how you hold the property.

If you are buying an Airbnb or vacation rental, there are three main loan options to consider:

• Conventional Loan
• DSCR / STR Investor Loan
• Hybrid STR Investor Loan

Let’s break them down.

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What’s Usually Best?

• Want to use w-2 income? → Conventional loan
• Pure investor using Airbnb income to qualify? → DSCR loan
• Have both personal income and STR income? → Hybrid STR loan

Now let’s go deeper.


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1. Conventional Loan for Airbnb

A conventional loan is the most traditional mortgage option.

Key Features

• As little as 10 percent down (depending on occupancy and guidelines)
• No prepayment penalties
• STR income typically cannot be used to qualify unless documented on tax returns
• Must be in your personal name
• Impacts your personal debt to income ratio (DTI)
• Mortgage insurance required if putting less than 20 percent down

Pros

• Often lower rates for strong borrowers
• No prepayment penalties
• Familiar underwriting process

Cons

• Hard to scale multiple Airbnbs
• STR income usually cannot help you qualify
• PMI increases monthly payment if under 20 percent down

Best For

Buyers who plan to owner occupy part of the time or have strong W2 or documented income.

2. DSCR / STR Investor Loan

This is one of the most popular loan options for Airbnb investors.

DSCR stands for Debt Service Coverage Ratio. Instead of qualifying based on your personal income, the lender looks at the property’s rental income.

Key Features

• Qualifies based on property income
• STR income projections or Airbnb history can be used
• Can often close in an LLC
• Does not impact personal DTI the same way conventional does
• As little as 15 percent down in some cases
• No mortgage insurance even under 20 percent down

Pros

• Scale faster
• Keep loan and title in an LLC
• Easier qualification for self employed investors
• Designed specifically for short term rental investing

Cons

• Interest rates can be slightly higher than conventional
• Reserves often required
• Guidelines vary between lenders

Best For

Real estate investors building a portfolio of short term rentals.

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3. Hybrid STR Investor Loan

This is the middle ground between conventional and DSCR.

Hybrid loans combine personal income and short term rental income to qualify.

Key Features

• Combines personal income and STR income
• As little as 15 percent down
• First time STR investors welcome
• No mortgage insurance even under 20 percent down
• Requires income documentation and DTI review like conventional
• Prepayment penalties typically 1 to 5 years

Pros

• Flexible qualification
• More approval power than conventional alone
• Better structure for scaling than traditional loans

Cons

• May include prepayment penalty
• Still requires income documentation
• Newer product so not all lenders offer it

Best For

Investors who have strong income but also want Airbnb revenue counted toward qualification.

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So What Is the Best Loan to Purchase an Airbnb?

The best loan depends on:

• Are you owner occupying?
• Do you need Airbnb income to qualify?
• Do you want the property in an LLC?
• Are you scaling multiple properties?

For serious short term rental investors, DSCR or Hybrid STR loans are often the better long term strategy.

For house hackers or part time Airbnb owners, conventional may work.

The key is choosing the right structure from the beginning.

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Work With a Lender Who Understands STR Investing

At Total Quality Lending, we specialize in financing short term rental properties nationwide.

We help investors structure the right loan for:

• Airbnb purchases
• Vacation rental refinances
• Scaling STR portfolios
• LLC structuring
• First time STR investors
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If you are considering buying an Airbnb, let’s structure it correctly from day one.

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