Short-term rental loans are the category of mortgage loans designed specifically for Airbnb, VRBO, and other vacation rental properties, where income comes from short-term stays rather than long-term leases.

This guide covers the best loan types available for short-term rental investors, how investors can qualify, and which STR loan option is best for different investor scenarios. 

Ridge Street Capital is one of the leading US lenders for Short Term Rentals (STRs) in 2026 and has been recognized as the Real Estate Business Review DSCR Lender of the Year for our specialization in STR financing. 

Our Short Term Rental Loans (STR Loans) combine the low rates associated with 30-year fixed rate residential mortgage products and add flexible underwriting and DSCR qualification criteria, to allow short-term rental investors to qualify using the projected STR income of the property with no personal income verification (ie, no W-2’s or no tax returns).

Below, we break down how short-term rental financing works, compare the major STR loan options available today, and explain how investors can structure financing to scale Airbnb and vacation rental portfolios more efficiently. 

What Are Short-Term Rental Loans?

The term "short-term rental loan" is not a single product. It describes the category of several loan types that investors use at different stages of the STR lifecycle: DSCR loans for turnkey rental properties, hard money or fix and flip loans for acquisitions and renovations, and conventional / 2nd home investment loans for borrowers who want to qualify on personal income. 

Short-term rental loans are for investment properties only (not primary residences) and are structured around the variable income of Airbnb, VRBO, and vacation rental properties. STR loans evaluate the property's ability to generate enough rental income to cover monthly principal, interest, taxes, and insurance. By not relying on W-2 income, real estate investors can purchase and scale cash-flowing short-term rental portfolios without having to worry about qualification or debt-to-income utilization.

With rates on most short-term rental loan products in the low to mid 6% range, there are great STR loan options for investors across the US. 

Short-Term Rental Loan Types: What Options Are Available?

Different short-term rental financing options are designed for different investment strategies. Some loan programs work best for turnkey Airbnb properties, while others are better suited for renovations, refinancing, or scaling large rental portfolios. 

Below is a breakdown of the main STR loan types and when investors typically use each one.

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DSCR Loans For Short-term Rentals

One of the most popular choices for financing short-term rentals is DSCR loans. 

‍Ridge Street has a separate guide specifically for DSCR loans for Airbnb, but we’ll provide more detail here and explain why DSCR loans have become so popular for short-term rental properties.

A DSCR loan is qualified when the projected rental income covers the property's mortgage payment (principal and interest), taxes, insurance, and HOA dues. 

For short-term rental properties, a special variation of DSCR loans, often called STR DSCR Loans or DSCR Loans for Airbnb, is needed to qualify a property using the projected short-term rental income. 

Traditional DSCR loans rely on the “appraised long-term market rent” of a property, which often is not high enough on most short-term rentals to qualify for a DSCR Loan at maximum leverage. 

Instead, specialized Airbnb Loan Programs rely on the AirDNA projected short-term market rents to qualify the property for higher monthly rental income estimates. After all, the whole basis of a short-term rental investment is to pursue higher monthly rental income by offering a shorter term nightly lease rate. AirDNA aggregates nightly rate and monthly occupancy data for other similar short-term rentals listed on Airbnb, VRBO, Booking.com, etc., to provide an estimate of the monthly income that can be expected for the subject property when listed as a short-term rental. This flexibility allows rural properties in Airbnb destinations, properties in higher ticket markets, and prime vacation destination rentals to qualify in many cases.

Additionally, STR DSCR loans do not require W-2s or tax returns and have no personal debt-to-income ratio requirements. DSCR loan qualification is based purely on the projected short-term rental income covering the monthly PITIA (Principal, Interest, Taxes, Insurance, and Association fees) at a ratio of 1.0 or above. 

Lastly, DSCR loans close in 21–25 days, support LLC ownership, and carry no cap on the number of properties an investor can finance. Each property qualifies independently on its own cash flow. This structure is the primary approach to STR financing for investors who are self-employed, hold multiple properties, or want to scale a portfolio without hitting the Fannie Mae limitations.

Conventional / 2nd Home Investment Loans for Short Term Rentals

Conventional investment loans follow Fannie Mae and Freddie Mac guidelines and generally offer the lowest rates available for investment properties, often running about 0.25% to 0.5% below comparable DSCR loan pricing at similar credit tiers. 

However, conventional second home loans for investment properties are qualified using W-2 income, personal tax returns, and limit borrowers to a total debt-to-income ratio of 35%-40% (maximum). These restrictions often restrain investors from scaling their portfolios beyond a certain point. 

For short-term rental properties specifically, conventional lenders require 12–24 months of documented rental history before counting short-term rental income toward qualification. Properties without that operating record either do not qualify or must be underwritten on long-term market rent, which often produces a lower qualifying income figure than actual STR performance.

Additionally, many conventional second home investment loan programs require that borrowers reside in the state they are investing in, often require that the property be used more than 180 days per year for personal use, and preclude vesting ownership in an LLC. This can create a deal-breaking issue for borrowers who are aiming to capitalize on out-of-state investments in prime short-term rental markets that they do not reside in year-round.

Conventional financing works for short-term rentals when investors have strong W-2 income, a low debt-to-income ratio, a credit score above 720, are investing in-state, and the property is vested in their personal name. As the portfolio grows, personal DTI tightens, and the Fannie Mae limitations become a real constraint.

Hard Money and Bridge Loans for STR properties 

Hard money loans (also called fix and flip loans or bridge loans) are short-term, asset-based financing products used by investors to acquire, renovate, and stabilize short-term rental properties before refinancing into permanent financing. Unlike DSCR loans or conventional options, these loans are designed for properties that are not yet ready to qualify using projected rental income because they are not yet turnkey.

Most hard money loans are structured as interest-only loans with terms of 6 to 12 months and rates typically ranging from 10% to 12%. Qualification is primarily based on the property’s current value, renovation plan, and projected after-repair value (ARV), rather than the borrower’s personal income or the property’s current cash flow.

For STR investors, hard money is commonly used when:

• The property is distressed or needs significant renovation
• The property is vacant or not yet producing income
• The investor wants to furnish or reposition the property as an Airbnb or vacation rental
• The deal needs to close quickly, often within 7 to 14 days
• The investor plans to refinance once the property is stabilized and generating bookings

In most cases, the hard money loan covers both the acquisition and renovation costs. After the renovations are complete and the property is operational as a short-term rental, the investor refinances into a STR DSCR loan based on the property’s projected rental income.

This two-phase structure is the short-term rental version of the BRRRR strategy: buy, renovate, rent, refinance, and repeat. The main difference is that the stabilization phase focuses on furnishing the property, optimizing the listing, and establishing short-term rental income before refinancing into long-term financing.

Which STR Loan Fits Your Situation?

Most short-term rental financing decisions come down to three variables: whether the property is rent-ready, whether the investor qualifies using personal income-based underwriting requirements, and how many properties they already own. The following scenarios map those variables to the right loan type.

1. Acquiring a New Airbnb with No Rental History

If the projected short-term rental income using AirDNA or similar market data is high enough to cover the debt service of the property, then no operating history is required.

Primary Recommendation: DSCR Loan for Airbnb for no-rental history requirement and no personal income requirement. 

Secondary Recommendation: Conventional Second Home Investment Loan for high personal income borrowers investing within the state of their primary residence.

2. Refinancing an Existing Short-Term Rental To Access Equity in the Property

If the short-term rental has been owned for a number of years and has appreciated in value, there is untapped equity that an investor can access with a cash-out refinance. 

‍Recommendation: DSCR Loans for cash-out refinances allow investors to borrow up to 75% of the appraised value of the property as long as the property remains cash flow positive.

3. Acquiring a Distressed Property to Renovate and Turn Into an Airbnb

Real Estate investors often execute the BRRRR Strategy by purchasing distressed properties that are not eligible for long-term financing right away because of the repairs needed to make them habitable. By completing full renovations on the property, the value can be increased, the property can be stabilized as a short-term rental, and then refinanced so that the investor can recoup their initial investment. 

Recommendation: A two-step approach is recommended here. Use a hard money loan to purchase and renovate the property, and then use a DSCR loan to refinance the property once it is rent-ready.

4. First Short Term Rental To Be Used For Partial Personal Use

Recommendation: Conventional investment loan. 

Rates are lower, there is no prepayment penalty, and the qualification process is familiar. The constraint is that Airbnb income cannot be used for qualification until the property has 12–24 months of documented operating history, so the deal must qualify on the investor's personal income alone.

5. Scaling a Portfolio of Two or More Short Term Rentals

Recommendation: Use a DSCR Loan because borrowers will not face the debt-to-income restraints of conventional loan underwriting.

Down Payment and Reserve Requirements For STR Loans

The down payment requirements for short-term rental loans vary based on loan type. Below are the down payment and liquidity requirements for each loan variation.

DSCR loans: Most programs require 20% down for purchases, including Ridge Street’s Airbnb loan program. Cash-out refinances are capped at 75% LTV and require no down payment. For purchase transactions, investors must have 6 months of PITIA as a liquidity buffer in addition to the down payment plus closing costs. For cash-out refinances, borrowers are not required to verify liquidity if the cash-out proceeds cover the closing costs plus 6 months of PITIA requirement.

Conventional investment loans: Down payment requirements run 15%–25%, depending on property type and number of units. Reserve requirements are similar to DSCR programs.

Hard money loans: Down payments typically run 10%–20% of the purchase price, calibrated against the after-repair value. The renovation budget is funded through a draw holdback. 

Closing costs, including lender fees, title, appraisal, and insurance escrows, typically add 2%–5% of the loan amount on top of the down payment. These costs are paid upfront and are not rolled into the loan on most investment property programs.

Things To Be Cautious Of When Choosing a Short-Term Rental Loan Option

There are several common mistakes investors make when pursuing short-term rental financing. Unlike traditional owner-occupied mortgages, many short-term rental loans are underwritten based on the projected income potential of the property, making proper planning and deal analysis especially important. Below are some of the most common pitfalls investors run into and how to avoid them.

1. Looking for a General Pre-Approval Before Pre-Screening Properties

Many lenders today offer DSCR loan programs as an add-on product, but not all lenders truly understand short-term rental underwriting. It is common for investors to receive a generic pre-approval letter based primarily on credit score, liquidity, and personal income without any actual analysis of the target property.

With short-term rental loans, the property itself plays a major role in the approval process. Lenders often evaluate projected Airbnb or vacation rental income using third-party STR data providers and market-specific performance metrics. Because of this, a borrower may qualify in theory but still run into issues once a property is identified.

Instead of relying solely on a broad pre-approval, investors should begin pre-screening potential properties early in the process. A good DSCR lender should be able to review projected cash flow, estimated DSCR, occupancy assumptions, and market performance before you go under contract.

You can also review our full guide on DSCR loan pre-approval to better understand how the process works.

2. Not Accounting for Closing Costs and Liquidity Requirements

One of the most common misconceptions among first-time STR investors is assuming that having the minimum down payment is enough to close the transaction.

For example, even if a loan program only requires 20% down, borrowers still need to account for:

• Title and escrow fees
• Insurance costs
• Prepaid taxes and reserves
• Appraisal and underwriting fees
• Origination charges and lender fees (if applicable)
• Post-closing liquidity requirements

In addition, many Airbnb lenders require borrowers to maintain reserve funds after closing. These reserve requirements are often measured in months of principal, interest, taxes, insurance, and HOA payments.

As a general rule, investors should budget an additional 5% to 10% of the purchase price beyond the down payment requirement to avoid liquidity issues during closing.

3. Getting an “Over-the-Phone Rate” Instead of a Written Term Sheet

Another common issue is relying on verbal rate quotes without reviewing the actual loan structure.

Many lenders advertise or quote their lowest possible rates upfront, but those rates may assume:

• Significant discount points or rate buydowns
• Strong DSCR ratios
• Lower leverage
• Excellent credit
• Specific property types or markets

In some cases, the quoted rate may not reflect the actual terms available for your transaction.

Before moving forward with any lender, request a written term sheet outlining:

• Interest rate
• Points and lender fees
• Loan term and prepayment penalties
• Estimated cash to close
• DSCR requirements
• Reserve requirements
• Any assumptions tied to the quote

A detailed term sheet allows investors to properly compare loan options and avoid surprises later in the process.

4. Not Accounting for Furnishing Costs

If the property is not being sold fully furnished, furnishing expenses can become a significant upfront cost that investors underestimate.

Unlike traditional long-term rentals, short-term rentals typically require:

• Furniture packages
• Kitchen supplies and cookware
• Bedding and linens
• TVs and electronics
• Decor and staging
• Outdoor furniture or amenities

Depending on the size, location, and quality level of the property, furnishing costs can range from approximately $10,000 for a small condo to $50,000 or more for larger luxury vacation rentals.

These costs should be factored into your total project budget before purchasing the property.

5. Not Keeping Enough Reserves for Short-Term Rental Volatility

Short-term rental income can fluctuate significantly throughout the year. While lenders may qualify a property based on annualized projected income, actual monthly cash flow is rarely consistent.

Most STR markets experience seasonality, weather-related slowdowns, local economic shifts, and changing tourism demand. Some months may generate substantial profits, while others may barely cover expenses.

Because of this, investors should avoid operating with minimal reserves. Maintaining additional liquidity can help cover:

• Slow occupancy periods
• Unexpected maintenance issues
• Repairs and replacements
• Regulatory changes or permit delays
• Temporary declines in nightly rates

Strong reserve management is especially important for newer investors who have not yet experienced a full seasonal cycle within their target market.

STR Loan Funded By Ridge Street

Saint George Island is a barrier island off the Florida Panhandle with consistent vacation rental demand driven by beach tourism and limited inventory. The borrower acquired a condo unit as a short-term rental investment, financed under Ridge Street's 30-year fixed Airbnb Financing program.

Despite the borrower being a first-time investor and from out-of-state, the loan closed in 23 days with no origination fee. Income was qualified on STR projections for the Saint George Island market, producing a DSCR of 1.15. The borrower's credit score of 728 met the 700 minimum for Ridge Street’s Short-Term Rental DSCR programs, supporting favorable pricing on a 30-year fixed term. 

Finance Your Next Short-Term Rental

Getting a loan for your first short-term rental is easier than you might think. With the flexibility of DSCR Loans, more real estate investors are pursuing short-term rentals as a part of their investment strategy. 

Ridge Street Capital provides short-term rental mortgages across 35 states, including DSCR loans for the purchase and refinance of Airbnb and VRBO properties, as well as hard money loans for STR acquisitions and renovations.

To get started, investors can get pre-approved for a DSCR loan by submitting their property details through Ridge Street's online application. If you don’t yet have a specific property lined up, you can book a call with a member of the Ridge Street team who will go through an example, answer your questions, and pre-qualify you for a target loan amount. 

‍Short-Term Rental Loans FAQ

Where do you lend for short-term rentals?

Ridge Street Capital lends on short-term rentals in 35 states across the country. 

Here are our states of operation: https://www.ridgestreetcap.com/where-we-lend. 

What type of loans are Ridge Street Capital’s short-term rental loans?

Most of our short-term rental loan programs are DSCR loans designed for real estate investors. These loans are primarily underwritten based on the projected cash flow of the property rather than the borrower’s personal income. We also offer fix-and-flip financing for STR properties that need renovation or stabilization before long-term financing. 

Do you finance rural STR properties?

Yes, Ridge Street Capital finances rural Airbnbs and short-term rentals regularly. Properties near vacation destinations, lakes, mountains, national parks, or other tourism-driven areas are commonly eligible, although extremely remote properties may have additional restrictions. 

Can I use Airbnb income to qualify?

Yes. STR DSCR programs use projected Airbnb or historical short-term rental income to qualify a property. Ridge Street uses AirDNA reports or historical STR income when available. 

Are Short-Term Rental Loans the same as Airbnb Loans?

In most cases, yes. The terms “short-term rental loan” and “Airbnb loan” are often used interchangeably in the lending industry. These loans are designed for properties that generate income through platforms such as Airbnb, VRBO, or direct vacation rental bookings. 

Can a DSCR Loan Be Used for a Short-Term Rental?

Yes. DSCR loans are one of the most common financing options for short-term rental investors. 

What is the Minimum Credit Score for a Short-Term Rental With Ridge Street?

Ridge Street’s Short Term Rental Loans require a minimum credit score of 700. Our DSCR loans for short-term rentals have a higher credit score requirement than our regular DSCR program for long-term rentals, which requires a minimum FICO score of 660. 

Do you Use AirDNA projections for Short Term Rental Loans?

Yes, our STR loan programs use AirDNA projections and analysis during underwriting. 

What is AirbnBRRRR?

AirbnBRRRR is a variation of the traditional BRRRR strategy where investors buy, renovate, rent, refinance, and repeat using short-term rental properties instead of long-term rentals. The strategy is designed to increase property value and cash flow before refinancing into DSCR financing. 

Does Ridge Street Capital Finance Non-Warrantable Condos With Short-Term Rentals?

Yes, Ridge Street finances non-warrantable condo projects (and sometimes condotels) as long as the property is cashflow positive based on AirDNA projections. Many “STR Condo Markets” in FL, TX, and CO perform very well as short-term rentals. 

If I get a DSCR Loan On A Vacation Rental Property, am I ever allowed to stay there?

DSCR loans have strict non-owner occupancy requirements. This said, limited personal usage may be permitted depending on the loan program and lender guidelines. 

Can I finance a Duplex, Triplex, or Quadplex with a Short-Term Rental Loan?

Yes, residential DSCR programs allow financing on properties up to 4 units. 

How many properties can I finance with a Short Term Rental Loan at one time?

If you are financing a short-term rental with a DSCR Loan, then there are no “number of properties” limitations. If you use a conventional loan, you will be limited to a DTI requirement (typically 40%) and to a 10-property limit set by the Fannie Mae guidelines.