Short-term rental investors face a different underwriting game than traditional landlords. Your Airbnb grosses $7,000 a month in Scottsdale, but the lender does not see $7,000. They see $7,000 minus a 25% haircut, minus platform fees, minus their own risk assumptions. The DSCR that matters is the one the lender calculates, not the one on your spreadsheet. This calculator models the lender's math so you can see the gap before it surprises you at underwriting.
How lenders underwrite STR income
DSCR lenders use one of two methods to determine the income on a short-term rental, and the method they pick can swing your qualifying DSCR by 0.20 or more.
Method 1: Actual trailing revenue. The lender pulls 12 months of income directly from your Airbnb, Vrbo, or property management dashboard. They want gross booking revenue, not what hits your bank account after platform fees. This method favors experienced operators with a track record. A well-run listing in Nashville with 75%+ occupancy will produce a higher qualifying income than any projection model.
Method 2: Third-party STR projection. The lender orders a report from AirDNA, Rabbu, or a similar provider that estimates annual revenue based on comparable listings within a defined radius. This is the default for acquisitions and properties with less than 12 months of operating history. The projections tend to be conservative because they blend high-performing listings with mediocre ones. Your actual revenue will likely beat the projection if you operate competently.
A handful of lenders use the lower of the two numbers. Others let you choose. The difference matters: a Gatlinburg cabin might show $72,000 in actual trailing revenue but only $58,000 on the AirDNA projection. That $14,000 gap, after the haircut, can be the difference between a 1.25 DSCR and a 1.02.
The haircut: why lenders discount your Airbnb revenue
Every lender that accepts STR income applies a discount to your gross revenue before calculating the DSCR. The industry calls it the "haircut," and it exists because short-term rental income is inherently more volatile than a 12-month lease. Vacancy swings, seasonal demand shifts, regulatory risk, and platform fee changes all introduce uncertainty that a long-term rental does not carry.
The typical haircut is 25%. Some lenders go as low as 15% for properties in established STR markets with 12+ months of consistent revenue. Others apply 30% to 35% in markets with regulatory uncertainty or strong seasonality. The haircut is not negotiable on a per-deal basis; it is baked into the lender's program guidelines.
Here is what the haircut does to your numbers on a property grossing $6,000/month on Airbnb with a $3,800 monthly PITIA:
| Haircut | Qualifying income | DSCR |
|---|---|---|
| 15% | $5,100/mo | 1.34 |
| 25% | $4,500/mo | 1.18 |
| 30% | $4,200/mo | 1.11 |
| 35% | $3,900/mo | 1.03 |
A 20-point spread in haircut percentage moves the DSCR from comfortably fundable to barely qualifying. This is why shopping lenders on the haircut percentage matters as much as shopping the rate.
STR vs long-term rental DSCR
The DSCR formula is the same for both. The underwriting around it is not.
| Factor | Long-term rental | Short-term rental |
|---|---|---|
| Income source | 12-month lease or rent survey | Trailing Airbnb revenue or STR projection |
| Income discount | None (or 5% vacancy factor) | 15% to 35% haircut on gross revenue |
| Reserves required | 3 to 6 months PITIA | 6 to 12 months PITIA |
| Max LTV (purchase) | 75% to 80% | 70% to 75% |
| Max LTV (cash-out refi) | 70% to 75% | 65% to 70% |
| Seasoning for actuals | Not applicable (lease in place) | 12 months of STR operating history |
| Regulatory risk factor | Low | Moderate to high (market dependent) |
| Rate premium | Base DSCR rate | +0.25% to +0.75% above LTR DSCR |
The math often works out in favor of STR despite the tighter underwriting. A Destin condo that rents long-term for $2,200/month might gross $5,500/month on Airbnb. Even after a 25% haircut ($4,125 qualifying income), the STR DSCR is nearly double the long-term rental DSCR. The lender makes you jump through more hoops, but the property qualifies more comfortably.
Which lenders accept STR income?
Not all DSCR lenders underwrite short-term rental income. Roughly half the market sticks to long-term leases only. The lenders that do accept STR income vary widely in how they handle it: different haircut percentages, different seasoning requirements, different LTV caps.
Our lender matrix tracks which lenders accept STR income and their specific terms. The count changes as lenders update their programs, so the matrix pulls from live data rather than a static list. Filter by "STR accepted" to see your options.
When shopping STR lenders, the haircut percentage and reserve requirements matter more than the rate. A lender quoting 7.5% with a 15% haircut will qualify more deals than one quoting 7.25% with a 30% haircut. Run both scenarios in the calculator above before you pick.
Common STR DSCR mistakes
- Underwriting to peak-season revenue. Your Scottsdale Airbnb grosses $9,000 in February and $3,500 in August. The lender uses the 12-month average, not your best month. If you only looked at high-season numbers when you bought, the annualized DSCR will be lower than you expected.
- Ignoring the haircut until underwriting. You ran the numbers at full Airbnb revenue and the deal looked great. Then the lender applied a 25% haircut and the DSCR dropped from 1.35 to 1.01. Model the haircut from day one. The calculator above does this automatically.
- Assuming all DSCR lenders accept STR income. They do not. About half the DSCR market is long-term rental only. Applying to a lender that does not accept STR income wastes two to three weeks and an appraisal fee. Confirm STR eligibility before you pay for anything.
- Not accounting for STR operating costs.A long-term rental costs roughly 35% to 40% of gross rent to operate. An Airbnb costs 50% to 60% when you factor in cleaning, supplies, platform fees (3% host fee), dynamic pricing tools, and higher turnover maintenance. Your NOI is lower per dollar of gross revenue than a long-term rental, even before the lender's haircut.
- Skipping the regulatory check. A DSCR lender will not fund a property where the STR use is prohibited or requires a permit you do not have. Cities like Nashville now require STR permits with waitlists. If the income source is legally at risk, the loan is at risk.
Frequently asked questions
How do lenders underwrite Airbnb income for a DSCR loan?
Two methods. First: actual trailing 12-month revenue from your Airbnb or Vrbo host dashboard. Second: a third-party STR income projection from a provider like AirDNA or Rabbu. If the property has less than 12 months of rental history, most lenders default to the projection. Some use the lower of the two numbers. Always ask which method the lender uses before you apply, because the income figure they accept drives the entire deal.
What is the haircut on STR income?
Most lenders discount your gross Airbnb revenue by 25% to account for vacancy, platform fees, cleaning, and management costs. The range is roughly 15% to 35% depending on the lender and the market. A property grossing $6,000/month on Airbnb gets underwritten at $4,500 after a 25% haircut. That single adjustment can drop a 1.40 DSCR to 1.05. Model the haircut before you model the deal.
Is it better to use actual STR revenue or a market rent projection?
It depends on your numbers. If your trailing 12-month Airbnb revenue (after the haircut) is higher than the market long-term rent, use actual revenue. If your property is new to STR or had a weak year due to renovations or seasonality, the market rent projection may produce a higher qualifying income. Some lenders let you choose; others mandate one method. A property in Gatlinburg with strong occupancy will almost always look better on actuals. A property you just converted from long-term will likely need the projection.
What is the difference between STR and long-term rental DSCR?
The formula is identical: income divided by debt service. The difference is how income gets measured. Long-term rental DSCR uses a 12-month lease or a rent survey. STR DSCR uses either actual platform revenue (with a haircut) or a projected STR income report. Because STR income is variable and seasonal, lenders apply a larger discount, require more reserves, and sometimes cap LTV 5% lower than they would on a long-term rental.
Do STR DSCR loans have seasoning requirements?
Most lenders want 12 months of Airbnb or Vrbo operating history to use actual revenue. If the property has less than 12 months, you are limited to projected income, which is usually more conservative. For a cash-out refinance on an STR, expect a 6 to 12 month ownership seasoning requirement on top of the income history. A few lenders will accept 3 months of actuals supplemented by a projection, but they are the exception.
Which states are most STR-friendly for DSCR loans?
Florida, Tennessee, Arizona, and Texas have the most active STR lending markets because those states have established vacation rental demand and lender familiarity. Markets like Destin, Nashville, Scottsdale, and the Texas Gulf Coast see high STR loan volume. Lenders are more cautious in states or cities with aggressive STR regulations (New York City, Los Angeles, parts of Colorado) because a regulation change can eliminate the income source overnight.
How many months of reserves do I need for an STR DSCR loan?
Expect 6 to 12 months of PITIA in liquid reserves, compared to 3 to 6 months for a long-term rental. Lenders price in the revenue volatility of short-term rentals. A property in a seasonal market like a ski town or beach community may trigger the higher end of that range. Retirement accounts typically count at 60% to 70% of face value toward reserves.
Can I use projected STR income on a property I have never operated?
Yes, and this is the standard path for acquisitions. The lender orders a third-party STR income projection (AirDNA, Rabbu, or a similar provider) that estimates annual revenue based on comparable listings in the area. The lender then applies their haircut to that projection. The resulting number is almost always lower than what experienced operators actually earn, which means your real-world returns will likely exceed the underwriting figure.