A short-term rental (STR) is a property rented by the night or week through platforms like Airbnb, VRBO, or Furnished Finder, and DSCR lenders will finance them. What trips up files at underwriting is the qualifying income: it is almost never the gross booking number an investor expects. The lender uses the lowest of up to three figures, and the appraisal's long-term rent is the floor. Model against that hierarchy from the start, and the deal you built is the one that actually closes.
Why gross booking revenue doesn't qualify
Gross STR revenue includes platform fees, cleaning fees, blocked-off nights, and money that never reaches the owner's bank account. Institutional lenders, the ones behind DSCR securitization programs, need income that's conservative and verifiable at origination, and gross Airbnb revenue is neither. It works like trading in a car: the dealer doesn't pay the asking price from a listing site, the dealer pays wholesale, the number they could defend if they had to resell tomorrow. A DSCR lender prices STR income the same way, at the number it can defend.
The three-figure hierarchy
Three terms matter here. Form 1007 is the appraiser's comparable rent schedule, an estimate of what the property would rent for as a standard unfurnished long-term rental. AirDNA is a market-data service that projects STR revenue for a property's category and location. A haircut is a percentage reduction a lender applies to an optimistic figure, and it exists because projections don't account for occupancy variance (how often the property actually books versus sits empty), cancellations, and seasonality. The three figures rank in a fixed order:
| Figure | Source | Haircut applied | Notes |
|---|---|---|---|
| Figure 1: Form 1007 long-term rent | Appraiser's estimate of standard unfurnished long-term rent | None | The floor figure; controls if you have no STR history |
| Figure 2: AirDNA projected income | AirDNA market revenue estimate for the property's STR category and location | × 70–80% (confirm the exact factor) | Haircut covers occupancy variance, cancellations, and seasonality |
| Figure 3: Documented 12-month STR gross history | Bank statements or platform payout statements documenting gross revenue | × 70–80% | Available only with 12+ months of STR operation |
The lender uses the lowest of the applicable figures, which is why the 1007 rent is called the floor. Buying a property that has never operated as an STR means Figure 1 is the qualifying income, full stop. With 12 months of STR history, Figure 3 may apply, but only if it beats the 1007 after the haircut, and only with full documentation.
Your deal
See if your deal qualifies.
Enter your property's rent, purchase price, and loan amount — get a DSCR (whether the property's rent can cover the loan payment), a rate estimate, and a program match in under a minute. No W-2s, no tax returns, no commitment.
Check my DSCRDocumentation to gather before underwriting
Each item below exists to make one of the three figures, or the property's basic eligibility, verifiable, so gathering them early avoids delay.
- An AirDNA market report for the subject property's zip code and property type, pulled at application.
- Form 1007 from the appraisal, ordered along with the rest of the appraisal package.
- 12 months of platform payout statements (Airbnb, VRBO) if documented history is the path; a 10-month history is not a 12-month history, and some programs accept the shorter record while others don't, so confirm before counting on it.
- A short-term rental license or permit. STR legality is set at the city or county level, and this platform holds no municipal STR dataset, so confirm the local rule yourself before counting on the income. A municipality that prohibits or restricts STR can knock the property out of eligibility entirely.
- Proof of business purpose. STR properties must be non-owner-occupied, and the borrower certifies the property won't become a primary residence.
For program fit, the matcher's current seven-program grid includes several STR paths, each with its own FICO, DSCR, leverage, property-type, and documentation rules. Use the matcher for a preliminary read, then confirm current eligibility and the controlling rent method with the responsible lender before ordering an appraisal.
The reserve overlay for STR
Reserves are months of PITIA, the full monthly payment, held in liquid funds after closing as the lender's cushion against vacancy. STR income runs more volatile than a lease, so providers commonly add an STR overlay on top of their baseline reserve requirement. The illustrative table below shows one such structure; confirm the actual months required with the responsible provider before relying on them.
| STR scenario (illustrative structure) | Reserve requirement |
|---|---|
| 1.20x DSCR | 6 months PITIA minimum (3 standard + 3 STR overlay) |
| Sub-1.0 DSCR | 12–15 months |
Walk one deal through the hierarchy
Take a 3BR single-family house in a beach market as an example. AirDNA projects $72,000 per year of gross STR revenue, which is $6,000 per month. The appraiser's Form 1007 says the same house rents long-term for $2,400 per month, and PITIA is $2,200 per month. Each path gives a different answer. On Figure 1, qualifying income is the 1007 rent: $2,400 divided by $2,200 gives a DSCR of 1.09x, a thin but positive cushion. On Figure 2, a 75% haircut applies to the projection: $6,000 × 0.75 = $4,500, and $4,500 divided by $2,200 gives 2.05x. Figure 3 only exists if the property has 12 months of documented STR history.
| Qualifying income path | Monthly income | Resulting DSCR |
|---|---|---|
| Figure 1: 1007 long-term rent | $2,400 | 1.09x |
| Figure 2: AirDNA projection × 75% | $4,500 | 2.05x |
| Figure 3: documented 12-month history × 75% | Only applies if history exists | Only applies if history exists |
With no STR history, the lowest-applicable rule qualifies this deal at 1.09x on long-term rent, not the 2.05x an investor might model from Airbnb projections. The deal still closes, but rate and reserve expectations need to be set for 1.09x, not for the projection. Run both cases in the DSCR calculator before the investor conversation, not after, so the number on the table matches the number underwriting will actually use.
The 1007 long-term rent is the floor. Without 12 months of documented STR history, that's the qualifying income, whatever AirDNA says the property could earn.
Reference
