DSCR Loan for Airbnb: How It Works for Short Term Rental Investors
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If you’re serious about buying multiple short term rentals or scaling an Airbnb portfolio, a DSCR loan may be the most powerful financing tool at your disposal.

DSCR stands for Debt Service Coverage Ratio, and it’s a type of loan that underwrites based on property income rather than your personal income.
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TL;DR / Quick Answer

• DSCR loans qualify based on property cash flow, not W2 income
• Down payments often start at 15%
• Mortgage insurance (PMI) is usually not required
• Many programs allow the loan to be in an LLC
• Ideal for scaling Airbnb or short term rental portfolios
  
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What Is a DSCR Loan?

A DSCR loan evaluates whether the property’s rental income covers the mortgage payment.

Debt Service Coverage Ratio (DSCR) = Net Operating Income ÷ Mortgage Payment

• DSCR ≥ 1 → property generates enough income to cover debt
• DSCR < 1 → property does not cover debt and may not qualify

For example:

• Airbnb generates $3,000/month
• Mortgage + taxes + insurance = $2,500/month
• DSCR = 3,000 ÷ 2,500 = 1.2 ✅

Lenders use this ratio instead of focusing only on personal income.


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Why Airbnb Investors Use DSCR Loans

1. Scale faster – Qualify for more properties without relying solely on W2 income.
2. Keep loans off personal credit – Many programs allow LLC ownership.
3. No PMI on low down payments – Save cash compared to conventional loans.
4. Flexible income documentation – Airbnb revenue, historical bookings, or platform data can be used.

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DSCR Loan Requirements

• Proof of property cash flow (Airbnb, VRBO, market analysis)
• Minimum credit score (varies by lender, often 680+)
• Reserves may be required
• LLC ownership allowed in many programs
  
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Who Should Consider a DSCR Loan?

• Investors buying their first Airbnb but want flexibility
• Portfolio investors scaling multiple short term rentals
• Borrowers who don’t have enough W2 income to qualify for conventional loans
• Investors who want to minimize PMI costs
  
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Key Takeaway

DSCR loans are specifically designed for short term rental investors. They allow you to qualify based on the property’s performance, not your personal income, and can be structured to support scaling your portfolio.

At Total Quality Lending, we specialize in DSCR financing for Airbnb investors nationwide. We help you understand requirements, down payments, and loan structures so you can close quickly and scale efficiently.

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