DSCR Loan for Short-Term Rentals | STR Financing | Bayou Mortgage
DSCR Loan Guide

DSCR Loan for Short-Term Rentals

Short-term rental income can qualify for a DSCR loan — but not all programs treat STR the same way. Here's how lenders evaluate STR income and what you need to know before financing your next STR property.

✅ STR income accepted on select programs✅ Airbnb & VRBO eligible✅ No personal income docs
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DSCR Loan Use Case

How STR Income Is Calculated on a DSCR Loan

Short-term rental income is treated differently than long-term rental income by most DSCR lenders. Understanding the distinction is critical before you make an offer on an STR property — the income the lender will count may be significantly different from what the property actually earns.

There are two main approaches lenders use for STR income on DSCR loans, and which method applies depends entirely on the program:

Method 1: Market Rent (Long-Term Equivalent)

Many DSCR programs — even those that allow STR properties — calculate the DSCR using the property's long-term market rent, not actual STR revenue. The appraiser estimates what the property would rent for on a 12-month lease, and that's the income figure used.

This is more conservative than actual STR income but is the most widely available approach. A property generating $4,500/month on Airbnb might only show $1,800/month in the DSCR calculation if that's the market rent for a long-term lease.

Method 2: STR Income (AirDNA / Actual)

Some DSCR programs accept STR income directly — using data from AirDNA, Rabbu, or 12 months of actual booking history. This method reflects real revenue potential and often produces a much stronger DSCR ratio for high-performing STR properties.

These programs are less common and typically have stricter credit and down payment requirements, but they're the right fit for investors buying specifically for STR performance.

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Which Method Applies to Your Deal?

This is one of the first questions Bayou Mortgage resolves before you're under contract. The right program depends on the property's location, your STR business plan, and whether you need STR income to qualify or if long-term market rent is sufficient on its own.

Program Comparison

STR Programs vs Standard DSCR Programs

FactorStandard DSCR (LTR Income)STR-Specific Program
Income used
Long-term market rent
AirDNA / actual STR revenue
Lender availability
Wide
Limited — select lenders
Min. credit score
620+
680–700+ on most
Down payment
20–25%
25–30%
Rate
Standard DSCR rate
Often slightly higher
Best for
STR that also works as LTR
High-performing STR markets
What You Need

DSCR Requirements for Short-Term Rental Properties

1
Property must be eligible for STRLenders check whether the property is in a location where STR is legal and permitted. HOA restrictions, local ordinances, and zoning all matter. If STR is restricted in the area, most programs won't lend on the property as an STR.
2
Credit score typically 680+STR programs often carry stricter credit requirements than standard DSCR. Most STR-specific lenders want 680 or above, with better programs opening up at 720+. See credit score requirements.
3
Down payment 25–30%STR properties are considered higher risk than standard long-term rentals, so lenders typically require more equity. See down payment requirements.
4
DSCR ratio 1.0+ (on applicable income)Whether the lender uses LTR market rent or STR income data, the resulting ratio must meet their minimum — typically 1.0 or above.
5
Reserves 6+ monthsSTR income is more variable than long-term rent, so lenders often require more cash reserves — sometimes 6–12 months of PITIA remaining after closing.
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Confirm STR Eligibility Before Going Under Contract

The two most common deal-killers on STR DSCR loans are HOA restrictions that prohibit short-term rentals and local ordinances that require STR licenses the property can't obtain. Bayou Mortgage checks lender STR eligibility requirements before you commit to a deal.

If Using AirDNA / STR Income

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AirDNA market data reportLender pulls this directly or requires it submitted.
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12 months operating history (if available)For an existing STR, actual booking history strengthens the income case.
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STR license or permitSome lenders require evidence the property can legally operate as an STR.
Know Your Market

STR Market Considerations for Louisiana Investors

Louisiana has some of the most active short-term rental markets in the country — New Orleans in particular has a long history of STR activity tied to tourism, but also some of the most complex local regulations. Other markets like Lafayette, Lake Charles, and Baton Rouge have growing STR demand tied to events, medical tourism, and business travel.

Strong Louisiana STR Markets

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New Orleans (French Quarter / Uptown)High nightly rates and occupancy, but strict permit requirements. Properties must have a valid STR license — unlicensed STRs will not qualify with most lenders.
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Lake CharlesEvent-driven demand from casino guests, concerts, and festivals supports strong STR performance.
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LafayetteGrowing market with demand from medical travel, university events, and regional tourism.

What to Verify Before Closing

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HOA STR policyMany Louisiana condos and planned communities prohibit short-term rentals outright.
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Local STR ordinancePermit availability, owner-occupancy requirements, and density caps vary by parish and city.
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Lender's STR-eligible property listSome lenders exclude certain zip codes or property types from STR programs regardless of local law.
Quick Reference

DSCR Short-Term Rental Loan: Quick Reference

Key requirements for financing a short-term rental property with a DSCR loan.

RequirementTypical RangeNotes
Credit score
680+ for most STR programs
720+ for best programs
Down payment
25–30%
Higher than standard DSCR
Income method
LTR market rent or AirDNA
Depends on program
DSCR ratio
1.0+
Some programs 1.10+ for STR
Reserves
6–12 months PITIA
Higher due to income variability
STR legal check
Required pre-approval
HOA, local ordinance, permits
LLC vesting
Available on most STR programs
LLC guide

Guidelines vary by lender and program. Bayou Mortgage — NMLS #1845349. Equal Housing Lender.

Financing an STR Property?

We'll match you to the right program — whether you need STR income in the DSCR calculation or long-term market rent is enough to qualify.

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Common Questions

DSCR Short-Term Rental FAQ

Can I use Airbnb income to qualify for a DSCR loan? +
Yes, on select programs. Some DSCR lenders accept short-term rental income from platforms like Airbnb using AirDNA market data or 12 months of actual booking history. Other programs allow STR properties but only use long-term market rent in the DSCR calculation. Which approach works best depends on whether your property needs STR income to qualify or if long-term market rent is already sufficient. See our Airbnb DSCR guide for more detail.
Does an STR property need a license or permit to qualify? +
Some lenders require evidence that the property can legally operate as a short-term rental — including active permits where required by local ordinance. In markets like New Orleans where STR licenses are required and capped, this is a significant factor. An unlicensed property in a regulated STR market may not qualify on STR-specific programs even if it's currently operating on Airbnb.
What if my STR is in an HOA? +
If the HOA prohibits short-term rentals, most lenders will not approve the property for an STR program — regardless of local law or whether the restriction is actively enforced. Always review HOA documents before making an offer on a property you intend to operate as an STR.
Can I buy a property and immediately operate it as an STR? +
Yes — a DSCR purchase loan can be structured for a property you intend to operate as a short-term rental from day one. For vacant STR properties without booking history, the lender uses AirDNA market data or long-term market rent (depending on the program) to calculate the qualifying income. You don't need existing bookings to qualify.
Are STR DSCR loans available in all Louisiana markets? +
Most lenders will finance STR properties in all Louisiana markets, but the income calculation method and program requirements may vary. New Orleans properties face additional scrutiny due to local STR regulations. Lake Charles, Lafayette, and Baton Rouge STRs are generally more straightforward to finance. Bayou Mortgage works in all Louisiana markets and knows which lenders are most favorable for each area.