The short-term rental market has exploded in recent years, with investors turning Airbnb and VRBO properties into serious income-producing assets. Yet despite the opportunity, many real estate investors still struggle to secure financing. Traditional mortgage lenders often reject short-term rentals because of fluctuating occupancy rates and inconsistent income streams, forcing investors to use unideal financing.

The solution lies in specialized short-term rental loan programs. These loans, often structured as DSCR (Debt Service Coverage Ratio) loans, focus on a property’s rental income and projected cash flow rather than the borrower’s personal income or tax returns.

What Are Short-Term Rental Loans?

Short-term rental (STR) loans are financing programs designed specifically for properties listed on platforms like Airbnb and VRBO. Most STR loans are structured as Debt Service Coverage Ratio (DSCR) loans, meaning approval depends on whether the property’s rental income can cover the loan payments.

Lenders calculate this by comparing the property’s projected or historical rental revenue (often using tools like AirDNA) to the monthly debt obligations, confirming the property can “pay for itself.” This approach tailors the financing to the unique income stream of nightly bookings and variable occupancy rates, focusing entirely on the asset's performance.

This is a major shift from conventional mortgages or hard money loans:

• Conventional mortgages rely heavily on your personal income, tax returns, and debt-to-income ratio, often excluding rental projections entirely.
• Hard money loans are short-term, higher-interest options meant for quick flips or construction projects, not long-term rental holdings

Types of Short-Term Rental Financing Options

Investors typically choose between three main loan types depending on how far along their property is: purchase, rehab, or refinance.

Investors should choose hard money for urgent acquisitions, conventional loans when personal finances are the primary qualifier, or DSCR when the property’s rental income can stand on its own.

How Ridge Street’s Short-Term Rental Loan Process Works

Ridge Street’s lending process is built for speed, simplicity, and transparency, so investors can move quickly when opportunity strikes.

1. Apply online in 2 minutes

Start with Ridge Street’s quick online application. It only takes a couple of minutes to share your property details and investment goals.

2. Receive a term sheet within 2 hours

Once your application is submitted, you'll receive a customized term sheet, often within just two business hours, outlining your rate, loan amount, and terms.

3. Submit documents

After you accept the terms, you’ll provide a small set of required documents. Ridge Street offers a low-documentation program, so there’s no need to supply tax returns or personal income statements.

4. Property appraisal using AirDNA data

An appraisal is then ordered to confirm the property’s projected income and market value. Ridge Street leverages AirDNA rental data to evaluate your short-term rental’s earning potential, giving investors credit for real Airbnb and VRBO income rather than long-term lease assumptions.

5. Close quickly

Once underwriting and appraisal are complete, Ridge Street schedules closing, often within three weeks of your initial application.

This fast, data-driven approach makes us a strong fit for both first-time investors and experienced operators scaling their portfolios. Few lenders combine such high leverage, short timelines, and income-based qualification for short-term rentals.

Short-Term Rental Loan Qualification Requirements

Ridge Street uses a straightforward underwriting process so investors can focus on finding their next deal, not drowning in paperwork. To qualify, here’s what lenders typically look for:

• Credit Score: Minimum of 700 to ensure solid borrower history.
• Leverage: Up to 80% loan-to-value (LTV) for purchases and 75% LTV for cash-out refinances.
• Debt Service Coverage Ratio (DSCR): Must be 1.0 or higher, meaning the property’s rental income covers the monthly mortgage payment.
• Income Verification: Either a live Airbnb/VRBO listing or AirDNA-based income projections to demonstrate rental potential.
• Eligible Property Types: Single-family homes, condos, and small multi-unit buildings.

Want to estimate your rental property’s potential returns? Try Ridge Street’s free DSCR Calculator to quickly evaluate cash flow and profitability before applying for financing.

Pros and Cons of Short-Term Rental Loans

Like any financing option, short-term rental loans come with both advantages and trade-offs. Understanding both helps investors choose the best strategy for their portfolio goals.

Pros

• Income-Based Qualification: Approval is centered on the property’s projected or actual rental income, giving investors flexibility even if they don’t have traditional W-2 earnings.
• Accessible to LLCs or Individuals: Investors can close loans in their personal name or through an entity, making it easier to structure for tax or liability purposes.
• Faster Timelines: Ridge Street’s streamlined process allows most deals to close within 21–25 days, keeping investors competitive in fast-moving markets.
• Higher Leverage Options: Up to 80% LTV on purchases enables investors to conserve capital and scale faster.
• Low Rates: Ridge Street's DSCR Loan rates start at 6.5%.

Cons

• Income Sensitivity: Approval depends on strong rental performance, low occupancy or weak market projections can limit available leverage.
• Investment-Only Financing: These loans are designed for non-owner-occupied properties, meaning they’re not suitable for primary residences.

Ultimately, short-term rental loans prioritize flexibility and speed over rock-bottom rates, an ideal trade-off for investors focused on cash flow and growth.

Real Short-Term Rental Loan Examples

Ridge Street’s lending programs are built around real investors and real properties, not hypothetical scenarios. Below are a few examples of funded short-term loans that highlight how flexible DSCR financing can be.

Dallas, TX — Airbnb Property

Ridge Street funded a $1,675,000 DSCR loan for a 4,600-square-foot Airbnb property featuring five bedrooms and seven bathrooms. The loan closed in just 21 days at a 7.65% rate and 80% LTV, achieving a DSCR of 1.25.

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Panama City Beach, FL — Airbnb Property

A $651,000 DSCR loan was funded for a 2,760-square-foot Airbnb property with five bedrooms and four bathrooms. The loan carried a 7.35% rate, 60% LTV, and a 30-year term.

These examples show how Ridge Street’s short-term rental loans combine speed, leverage, and income-based qualification, helping investors close quickly and maximize returns in competitive vacation rental markets.

How to Choose the Right Short-Term Rental Lender

Not all lenders approach short-term rental financing the same way, and the differences can significantly affect your returns. When comparing lenders, focus on three key areas:

1. Closing Speed: In competitive real estate markets, timing is everything. A lender that can issue terms and close within weeks (not months) helps you secure properties before other investors.
2. Experience with Short-Term Rentals: Many lenders still underwrite Airbnb and VRBO properties as if they were long-term rentals, using outdated assumptions that cap your leverage and reduce loan amounts.
3. Data-Driven Underwriting: Look for lenders that evaluate true short-term rental performance, using tools like AirDNA to account for occupancy rates, nightly pricing, and seasonal income trends.

Ridge Street’s dedicated short-term rental loan program is built around those principles. By focusing on the property’s actual or projected Airbnb income, Ridge Street offers higher leverage, faster approvals, and more accurate valuations than traditional lenders.

Financing Your Next Short-Term Rental Investment

The rise of Airbnb and VRBO has transformed short-term rentals into one of the most profitable investment strategies in real estate. But to capitalize on these opportunities, investors need access to financing that understands the unique economics of short-term rental properties.

Short-term rental loans, particularly DSCR loans for Airbnb and VRBO properties, make that possible. By qualifying based on your property’s income rather than your personal financials, they open the door to faster approvals, higher leverage, and long-term growth.

Ridge Street’s short-term rental loan programs are built for today’s real estate entrepreneurs. With closings in as few as 21 days, flexible documentation, and data-driven underwriting that uses AirDNA income projections, Ridge Street helps investors move quickly and confidently, whether you’re purchasing your first property or ready to pre-qualify your growing portfolio. 

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