Mortgage Glossary
Short-Term Rental (STR)
A property leased on a nightly, weekly, monthly, or seasonal basis — Airbnb, VRBO, FlipKey, Vacasa.
What is a Short-Term Rental?
A short-term rental (STR) is an investment property rented to guests on a nightly, weekly, monthly, or seasonal basis rather than under a traditional 12-month lease. The vast majority of STRs are marketed on platforms like Airbnb, VRBO, and FlipKey, or operated by a property-management company like Vacasa.
Unlike a long-term rental, STR income is highly variable — peak-season nightly rates can be multiples of a comparable monthly lease, while shoulder and off-seasons may produce very little revenue. STR underwriting therefore looks at a full twelve-month cycle, not a single month or season.
STRs typically generate higher gross rents than long-term rentals in the same neighborhood, but they also carry higher expenses: cleaning, supplies, dynamic pricing tools, platform commissions, and higher utility/insurance costs. Most STR underwriting models apply an expense factor (often 20%) to gross rents to reflect this.
How Short-Term Rentals work at Total Quality Lending
Total Quality Lending’s DSCR Short-Term Rental loan underwrites STR income using a 12-month average of actual gross rents with a 20% expense factor (or the property’s actual expenses if higher). When the property is a purchase with no operating history, TQL accepts an AirDNA Rentalizer report provided the AirDNA Market Score is 60 or higher.
On standard DSCR loans, STRs are eligible up to 80% LTV on purchase and 75% LTV on rate/term or cash-out refinance. Foreign-national borrowers on the FN DSCR program are capped at 70% purchase / 65% refinance for STRs. Condo-hotel projects are excluded from STR treatment on the FN program.
FAQs
What counts as a short-term rental for DSCR underwriting?
A short-term rental is a property leased on a nightly, weekly, monthly, or seasonal basis — typically listed on Airbnb, VRBO, FlipKey, or managed by Vacasa. The defining trait is that guests stay for short periods rather than a 12-month lease.
How does TQL calculate STR income for a DSCR loan?
TQL DSCR uses a 12-month average of actual gross rents with a 20% expense factor (or actual expenses if higher). For purchase transactions without operating history, an AirDNA Rentalizer report is accepted if the Market Score is at least 60.
What's the max LTV on a TQL STR purchase?
STR-eligible LTVs on standard DSCR are 80% on purchase and 75% on rate/term or cash-out refinance. State overlays and lower DSCR tiers may reduce these caps.