This article is presented by Host Financial.
I still remember trying to buy my second short-term rental. The numbers made sense, and the demand was there for my market.
But the bank? Not interested. They reviewed my tax returns, saw that I was self-employed, and sent me in circles for weeks before finally declining.
If you’ve been in that position, trying to scale your short-term rental (STR) portfolio while traditional lenders treat you like a risk, you’re not alone. That’s precisely why STR-specific mortgages are becoming so popular. These aren’t your average loans. They’re designed for people like us who are building cash-flowing businesses, not just vacation homes.
What Makes an STR Mortgage Different?
When you apply for a traditional mortgage, you usually qualify based on your personal income, credit, and debt-to-income ratio. That’s fine for a primary home or even your first rental. However, STR investors often encounter issues when attempting to purchase more than one property or lack W-2 income.
An STR mortgage flips the script. These loans use the property’s income potential to qualify, not your day job. Lenders like Host Financial often don’t even ask for your tax returns or W-2s. Instead, they look at things like:
- How much the property makes or is projected to make as a short-term rental
- Whether the income will comfortably cover the loan payments
- Your credit score and down payment
- If the property is in a strong vacation rental market
It’s called a DSCR loan, or Debt Service Coverage Ratio loan, and it’s quickly becoming the go-to strategy for serious STR operators.
The Power of the DSCR Loan
Let’s say you’re buying a cabin near a national park. Host Financial would evaluate how much a property is likely to earn on Airbnb based on real data, such as AirDNA projections or actual performance from a similar nearby property.
If the projected income from the property can comfortably cover the monthly mortgage, taxes, insurance, and any HOA fees, you’re in a strong position. Most DSCR lenders require a DSCR of 1.0 or higher. That simply means the property is generating enough income to cover all its debt expenses. If your DSCR is 1.2, for example, your net income is 20% higher than your monthly payments. That’s ideal.
Here’s the beauty of it: You don’t need to be rich, or even full-time in real estate, to use these loans. You just need a good deal and a lender that understands the STR game.
What Host Financial Offers
Host Financial is one of the first lenders to specialize purely in short-term rental financing. That means their entire model is designed for STR operators. No explanation of what Airbnb is, and no convincing someone that seasonal income is still income.
Here’s what sets them apart:
- Lends in 48 States (all except for North Dakota and South Dakota)
- 15% to 25% down payments
- Minimum FICO score of 620 (though 680+ can get you better rates)
- Loan sizes from $100,000 up to several million dollars
- 30-year fixed, 40-year fixed, or interest-only options
- LLC-friendly lending (yes, you can close in your business’s name)
They’ll also accept projected income instead of requiring 12 months of past data—a game changer if you’re buying a new build or rehabbing a property to become a short-term rental.
Who These Loans Are Perfect For
If you’re trying to build a short-term rental business that scales, there’s a good chance you’ve already run into the limitations of traditional financing. Maybe you were told you had too many properties, your W-2 income didn’t align with your rental revenue, or maybe your lender just didn’t understand the STR model at all. That’s where DSCR loans come in; they’re designed for investors, not just homeowners.
These loans are an excellent fit for individuals seeking to build something substantial. If you’re buying in a strong vacation rental market and want the property’s income to do the talking, not your tax returns, this kind of loan makes a lot of sense. It’s also one of the few financing options that allows you to buy under an LLC.
Many investors use DSCR loans when they realize the standard route is no longer viable. They want to buy more than one property. They need flexible terms, such as interest-only periods or adjustable-rate mortgages. And most importantly, they need a lender that understands the business of short-term rentals.
For many people, this is the point where the side hustle becomes a real portfolio. STR mortgages are how you go from one or two properties to a business that can grow year after year.
Things to Know Before Applying
STR mortgages are more flexible in many ways, but that doesn’t mean there aren’t requirements. You’ll still want to come prepared. Here’s what most lenders, including Host Financial, want to see:
- A good credit score (at least 620, but 680+ is better)
- A down payment of 15% to 25%
- Some cash reserves (usually a few months of payments)
- A property in a market with solid STR demand
- A realistic revenue projection, often backed by data from AirDNA, Rabbu, or actual bookings
Also, many of these loans come with prepayment penalties if you refinance or sell early. Ensure you understand the terms before signing any documents. A good loan officer will walk you through all of this.
What the Process Looks Like
The loan process is surprisingly smooth, especially when compared to the hoops one has to jump through with a traditional bank. Here’s how it usually works:
- Get prequalified based on your target property and credit (quotes and preapprovals provided without a credit pull)
- Submit income projections from AirDNA or 12 months of trailing booking data if available.
- Submit loan application, credit pull authorization form, and purchase contract (unless refinancing)
- Complete appraisal, insurance, and title.
- Close, usually within three to four weeks.
And you can often rinse and repeat. Once you’ve closed on your first STR mortgage, it becomes easier to do the next. Some investors go from one to five properties in under two years using these loans.
Final Thoughts
Short-term rental mortgages are one of the most significant tools professional hosts have in their arsenal right now. They aren’t just for people who’ve made it; they’re for those who want to make it.
If I had known about Host Financial when I first entered the business, I would have scaled much faster. Instead of saving for years and hoping a bank would say yes, I could have let the property prove its own value.
So, whether you’re on your first property or your fifth, it might be time to stop treating STRs like side hustles and start treating them like the businesses they are. That starts with financing designed for your world, not the bank’s.
