Yes, on many one to four unit DSCR programs. But the answer changes fast once you add units, and the part that actually stops deals is documentation rather than eligibility.
I place DSCR loans across more than a dozen investor programs. They do not agree with each other on short-term rentals, and the differences are large enough to change your loan-to-value, your rate, and sometimes whether the deal happens at all. Here is how it really works.
One to four units. Many DSCR programs accept short-term rental income here. This is the common case and the reason so many investors assume it is always allowed.
Five to eight units. Generally not permitted. On 5 to 8 unit residential programs, a unit operated as a short-term rental is typically treated as vacant, meaning no income counted from it. If your plan for a six-unit building is to furnish half of it and list it nightly, that plan and that loan usually do not fit together.
That single distinction is the most useful thing on this page, and almost nobody explains it before an investor is already under contract.
Eligibility gets the attention. Documentation kills the deals.
Across the programs I work with, qualifying short-term rental income generally comes from one of three places:
One more thing worth knowing: gross bookings are not the qualifying number. Programs typically reduce short-term rental income by around twenty percent to account for the extra costs of running one, cleaning, furnishings, advertising and management. If your actual expenses run higher than that, the higher figure is generally used.
This is the scenario that fails most often.
An investor finds a property in a vacation market, plans to run it nightly, and has never operated a short-term rental before. There is no twelve month history because they have not owned it. The seller will not hand over their operating statements. The market may not have enough short-term comparables for a clean AirDNA report.
Some programs will still work. Others require a year of short-term rental operating experience to reach their best loan-to-value, and at least one wants two years of history before short-term income counts at all.
The fix is not complicated, but it has to happen early: know which programs fit your situation before you write the offer, not after the appraisal comes back.
Loan-to-value often drops when short-term income is used. Several programs cap the LTV lower for short-term rentals than for a standard lease, or apply a pricing adjustment. Same property, same borrower, different maximum loan.
Operating experience can be worth several points of LTV. On at least one program, a year of documented short-term rental experience moves the maximum loan-to-value up meaningfully compared to a first-time short-term operator.
Program choice inside a single lender matters. This surprises people. One investor may permit short-term rental income on one of its DSCR programs and prohibit it on five others. The lender's name does not answer the question. The specific program does.
If the city, county or homeowners association restricts short-term rentals at the property, the income generally cannot be used regardless of what the numbers say.
Some programs exclude short-term rentals in specific places outright. That has included entire cities and, in one case, all five boroughs of New York. Chicago licenses shared housing, so on a local deal this is worth confirming early rather than late.
Send me the address, the unit count, whether you have operating history, and what you plan to do with the property. I will tell you which programs allow the strategy, what documentation each one wants, and what it does to your loan-to-value.
That is a short conversation, and it is far cheaper than finding out during underwriting that your income does not count.
More on the program: DSCR investor loans for 1 to 8 units. If you are looking at a larger building, read is a 5 unit building residential or commercial and can you get a 30 year mortgage on a 5 unit building.
Dan Frio is a federally registered mortgage loan originator with PBT Bancorp, NMLS #257781. Able to assist borrowers with mortgage financing nationwide. Serving Chicago, Kane County and the Fox Valley.
Dan Frio | NMLS #246527 | PBT Bancorp | NMLS #257781 | 524 Main St, Hazard, KY 41701 | Equal Housing Lender
Program guidelines are general, vary by investor and property, and are subject to change without notice. This is not a commitment to lend and not all applicants will qualify.
