What is an STR DSCR loan?

An STR DSCR loan is a type of DSCR loan designed specifically for short-term rental properties like Airbnb and VRBO. Instead of using long-term lease income, lenders qualify the loan based on projected or historical short-term rental revenue, typically verified through AirDNA market data or the property's operating income history. No personal income documentation is required.

How do lenders calculate income for STR DSCR loans?

Lenders use one of two methods: AirDNA market data projections for the subject property, or 12-24 months of actual operating income history if the property is already renting. The projected or actual gross revenue is used to calculate the DSCR ratio — rental income divided by the monthly mortgage payment. Most lenders require a DSCR of 1.0 or higher to qualify.

What credit score do I need for an STR DSCR loan?

Most STR DSCR loan programs require a minimum credit score of 640 to 680. Borrowers with scores of 700 or higher typically qualify for better rates and higher loan-to-value ratios. Credit score requirements vary by lender, so shopping multiple non-QM lenders is recommended.

Can I get an STR DSCR loan for a property in an HOA community?

Yes, but the HOA must permit short-term rentals. Many HOA communities restrict or ban Airbnb and VRBO rentals, which would make the property ineligible for STR DSCR financing. Always verify HOA bylaws before purchasing a vacation rental in a community with an HOA. Some markets also have local ordinances restricting short-term rentals.

What is the minimum down payment for an STR DSCR loan?

Most STR DSCR loan programs require a minimum down payment of 20 to 25 percent. Some lenders may allow 15 percent down for well-qualified borrowers with strong credit and high DSCR ratios, but 20 to 25 percent is the standard. The higher down payment reflects the additional risk lenders associate with short-term rental income variability.

Does Grafton Funding offer DSCR loans for rental properties?

Yes — DSCR (Debt Service Coverage Ratio) loans are our most popular product. We lend on single-family rentals, 2–4 unit properties, short-term rentals (like Airbnb and VRBO), and small multifamily up to 10 units. We qualify the property on its rental income rather than your personal income or tax returns. Minimum DSCR is typically 1.0x, and we lend in TX, FL, GA, NC, SC, and other states.

Does Grafton Funding do fix and flip loans or bridge loans?

Yes. We provide fix and flip loans and bridge loans for non-owner occupied investment properties. Our programs cover the purchase price plus rehab costs, with fast closings. Loan terms are short-term (typically 12–18 months) and are designed around the investor's exit strategy — either sale or refinance.

Can I get a DSCR loan for an Airbnb or short-term rental property?

Yes — we specialize in short-term rental (STR) financing. We use either the property's actual Airbnb or VRBO income history or a market-rate STR income estimate to qualify the loan. You don't need W-2s or tax returns.

Does Grafton Funding offer new construction loans for investment properties?

Yes. We offer new construction loans for non-owner occupied residential investment properties, including spec builds, ground-up construction, and lot + build projects. These are short-term loans that fund in draws as construction progresses.

Does Grafton Funding lend in North Carolina?

Yes — we actively lend in North Carolina, including the Charlotte metro, the Triangle (Raleigh/Durham/Chapel Hill), Wilmington, and Asheville. We offer DSCR rental loans, fix and flip loans, and new construction financing for NC investment properties. Local NC line: (910) 218-1286.

Can I qualify for a loan without showing tax returns or personal income?

Yes — our DSCR loans are underwritten based on the property's rental income, not your personal income or tax returns. This makes them ideal for self-employed investors and business owners. We do require a credit check and down payment, but there's no traditional income verification.

What credit score do I need to get a loan from Grafton Funding?

For most DSCR rental loan programs, we generally look for a minimum credit score in the 660–680 range, though this can vary by program and loan-to-value. Fix and flip loans may have different requirements depending on experience and deal strength.

How much do I need to put down for a DSCR loan?

For DSCR rental loans, we typically lend up to 75–80% loan-to-value (LTV), meaning you'd need 20–25% as a down payment. The exact LTV depends on the property type, DSCR ratio, and your credit profile. We lend exclusively on non-owner occupied investment real estate.

How quickly can Grafton Funding close a loan?

Many of our transactions close in 2–4 weeks depending on the loan type, property, and how quickly documentation is provided. We prioritize responsive communication and efficient underwriting for investors who need to move fast on deals.

Does Grafton Funding work with first-time real estate investors?

Yes — we work with both new and experienced investors. For DSCR rental loans, first-time investors are welcome as long as the property cash flows and the borrower meets our credit and down payment requirements. For fix and flip loans, some experience is preferred but not always required.

STR DSCR Loans: How to Finance Vacation Rentals with Rental Income

May 14
3 min read

Short-term rental investing has become one of the fastest-growing real estate strategies.

But traditional DSCR loans use long-term lease rent to qualify.

STR DSCR loans use Airbnb and VRBO income instead — and the qualification process is different.

Quick Answer: An STR DSCR loan qualifies using short-term rental income from Airbnb, VRBO, or comparable platforms — verified through AirDNA, Rabbu, or operating income history. Most programs require a 640+ credit score, 20–25% down, and a DSCR of 1.0 or higher based on projected STR revenue. No personal tax returns required. Properties must be in STR-legal markets with HOA approval where applicable.

How STR DSCR Loans Differ from Standard DSCR Loans

A standard DSCR loan uses one income source:

Signed lease (occupied property)
Form 1007 market rent appraisal (vacant property)

STR income is different — it varies seasonally and by platform. A beach Airbnb might earn $8,000 in July and $1,200 in February.

To account for this, STR DSCR lenders use annualized projections from data providers — not a single-month lease amount.

How STR Income Is Documented for Qualification

AirDNA / Rabbu Market Projections

For new acquisitions with no operating history, lenders use market-level STR data. Annual projected revenue is divided by 12 for monthly income.

Actual Operating History

For existing STRs with 12+ months of history, lenders accept actual Airbnb/VRBO payout statements or bank deposits from platform payouts.

Most lenders apply a discount factor (80% of projected income) to account for variance and seasonality.

Learn more about how STR DSCR qualification is calculated.

View our full STR loan programs for vacation rental investors.

STR DSCR Loan Requirements

Credit Score

640 minimum for most programs
740+ for best rates

Down Payment

20–25% down standard

DSCR

1.0 minimum based on annualized STR income ÷ 12
1.25+ qualifies for the best terms

Reserves

3–12 months PITIA in liquid assets

STR Legality

Municipality must permit short-term rentals
HOA must allow STR use (verify before applying)

Review full Airbnb loan requirements and qualification criteria.

Financing a Vacation Rental Property?

Review STR DSCR loan programs for Airbnb and VRBO investors,

View STR Loan Programs

Best STR Markets for DSCR Loan Qualification

Lenders prefer markets with strong, documented STR demand and reliable income projections.

Florida Coastal Markets

Destin, Panama City Beach, Miami, Florida Keys — among the strongest STR revenue markets nationally.

Mountain Vacation Markets

Smoky Mountains (TN), Blue Ridge (GA/NC), Colorado ski markets — strong year-round demand.

Urban Short-Stay Markets

Nashville, Austin, Savannah — high ADR driven by events, tourism, and business travel.

East Coast Beach Markets

Outer Banks, OBX, Delaware beach markets — seasonal but high-revenue vacation rental markets.

STR DSCR vs. Long-Term DSCR: Running the Numbers

In high-demand markets, STR income significantly exceeds long-term rent.

Example in a Florida beach market:

Long-term market rent (Form 1007): $2,200/month
AirDNA projected STR income: $4,800/month ($57,600 annually ÷ 12)
PITIA: $3,100/month
Long-term DSCR: 0.71 — does not qualify
STR DSCR: 1.55 — qualifies comfortably

In markets where STR income is dramatically higher than long-term rent, the STR DSCR loan is the only viable financing path.

For standard long-term rental financing, review our DSCR rental loan programs.

Bottom Line

STR DSCR loans unlock financing for vacation rental investors that standard DSCR programs can't support.

AirDNA or operating history verifies STR income
No personal tax returns required
DSCR calculated on annualized STR revenue
Property must be in STR-legal market with HOA approval
LLC financing supported

Frequently Asked Questions

Can I use Airbnb income to qualify for a DSCR loan?

Yes. STR DSCR loans are specifically designed to use Airbnb and VRBO income as the qualifying income source. For new acquisitions, lenders use AirDNA market data. For existing STRs, actual platform income history is used.

What DSCR do I need for a vacation rental loan?

Most STR DSCR programs require a minimum DSCR of 1.0, calculated as monthly STR income (annualized income ÷ 12) divided by PITIA. Programs that prefer 1.25 or higher offer better rates and terms.

Is it harder to get an STR DSCR loan than a regular DSCR loan?

STR loans are slightly more complex because income documentation requires market data rather than a simple lease. Not all DSCR lenders offer STR programs — work with a lender who specializes in STR financing.

Does the HOA affect my STR loan approval?

Yes. If the HOA prohibits short-term rentals, most lenders will not approve an STR loan. Verify the HOA's STR policy before applying. Local municipality restrictions also matter — heavily restricted markets are difficult to finance on an STR basis.

Can I finance a vacation rental through an LLC?

Yes. STR DSCR loans can be originated through an LLC, which is standard practice for investors managing multiple vacation rental properties.