Investors will typically use what is called a DSCR Loan for an AirBnB purchase. A DSCR Loan, known as "debt service coverage ratio", is the ratio of operating income available to debt servicing for interest, principal and HOA payments. It is a popular benchmark used in the measurement of an entity's ability to produce enough cash to cover its debt payments.
A DSCR Loan uses a rent appraisal to calculate market rent. If the market rent covers the total monthly mortgage payment, a lender will use that as qualifying income. It does not take into account personal income.
If you need cash for the down payment for an AirBnB purchase, we can assist in a home equity line of credit (HELOC) or cash out refinance on your primary home. The process is simple, and if you go with a home equity line of credit, we can get you the money in as little as 5 days. You can typically qualify for up to 80% of your homes value. For example, if your primary home is worth $500,000 and you only owe $250,000, you can potentially qualify for a $150,000 equity line (HELOC) to assist in meeting your down payment needs.
Obtaining financing for an investment property usually requires the following:
- 700+ Credit Score
- 20% Down Payment
- 12 Months of Bank Statements
- Maximum 10 DSCR Loans
- 6 to 12 months of reserves in the bank AFTER the down payment
- Other Restrictions May Apply