Short-term rentals (STRs) like those listed on Airbnb and Vrbo can offer impressive cash flow, but financing them can be tricky. Traditional lenders often hesitate to consider short-term rental income, while DSCR (Debt Service Coverage Ratio) loans provide a more flexible alternative. One powerful tool that can help you qualify for a DSCR loan on a short-term rental is AirDNA – the industry leader in short-term rental data.
In this guide, we’ll break down how to leverage AirDNA data to qualify for a DSCR loan, improve your cash flow projections, and secure financing for your next STR investment.
Why Use AirDNA Data for DSCR Loan Qualification?
AirDNA provides comprehensive data on vacation rental performance, including average daily rates, occupancy rates, and revenue projections. Lenders increasingly rely on this data to assess a property’s income potential, making it an invaluable tool for securing DSCR loans.
Key Benefits of Using AirDNA Data:
- Accurate Income Projections – Get realistic rental estimates for your property.
- Improved Cash Flow Calculations – Boost your DSCR by accurately projecting rental income.
- Competitive Edge – Present more compelling financials to lenders.
Steps to Qualify for a DSCR Loan Using AirDNA Data
Step 1: Analyze the Market
Use AirDNA’s MarketMinder tool to assess the short-term rental market in your area. Key metrics to focus on include:
- Average Daily Rate (ADR) – How much you can charge per night.
- Occupancy Rate – The percentage of nights your property is likely to be booked.
- Revenue Potential – Monthly or annual gross income projections.
For example, if the ADR in your area is $250 and the average occupancy rate is 70%, you can project potential monthly income as follows:
Monthly Income = ADR x Occupancy Rate x 30 Days
Monthly Income = $250 x 0.70 x 30 = $5,250
Step 2: Calculate Your DSCR
Once you have your estimated monthly income, you can calculate the DSCR to see if your property qualifies:
DSCR = Net Operating Income (NOI) / Total Debt Service
For example:
- NOI: $4,000 (after expenses)
- Total Debt Service: $3,000 (monthly mortgage payments)
- DSCR: $4,000 / $3,000 = 1.33
Most DSCR lenders require a ratio of 1.20 or higher to approve a loan. Use our DSCR Calculator to quickly check your numbers.
Step 3: Present Your AirDNA Data to Lenders
Many DSCR lenders will accept AirDNA reports as part of your income verification, especially for short-term rentals. Be sure to include key data points like ADR, occupancy rates, and historical performance.
Step 4: Choose the Right DSCR Lender
Not all DSCR lenders are experienced in financing short-term rentals. Be sure to choose a lender that understands the STR market and is willing to accept AirDNA data.
FAQs About Using AirDNA for DSCR Loans
Not all do, but many are starting to use it as a reliable source of income verification for short-term rentals. Always confirm with your lender.
AirDNA can still help by providing market averages, even if your property has no rental history.
Yes, many investors use AirDNA to qualify for DSCR loans on multi-unit vacation rentals. Learn more in our DSCR Loans for Multi-Unit Properties guide.
Ready to Get Started?
Don’t let financing hold you back. Get pre-qualified for a DSCR loan today and start scaling your short-term rental portfolio. Get Started Now
Or, explore our Complete Guide to Real Estate Investor Financing to discover more options.
Read Next
- DSCR Loans for Short-Term Rental Properties
- From First Rental to Real Portfolio: The DSCR Playbook
- Understanding DSCR Ratios: What Investors Need to Know
Our advise is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.
