The Quick Read: A nightly rental has no lease, so the best program for your situation is the one that accepts the right income evidence in place of one. That evidence is usually your booking history, an appraiser’s short-term rental analysis, or the long-term rent opinion as a fallback. Select lenders in Lendmire’s wholesale network weigh these differently, and the lender, not the appraiser, makes the final income call.
At a Glance: The best short-term rental cash-out refinance program is the one that accepts the income evidence your property can actually support, since nightly rentals have no lease. Select lenders typically weigh booking history, an appraiser’s short-term rental analysis, or long-term rent differently, and the lender makes the final income call, subject to lender guidelines.
- Cash-out on short-term rental collateral typically tops out around 70% LTV, while standard rentals reach about 75%.
- Your loan is limited by the smaller of two tests: an equity test and a rent-coverage test, where 1.00 is the floor on the short-term rental refinance programs Lendmire places.
- A standard rent schedule (Form 1007 or 1025) reflects monthly lease comparables, so it does not prove nightly income on its own.
- Expect a 640+ credit score and roughly 12 months of hosting history on most files, though some programs use a long-term rent basis instead.
- Clearing the coverage test is not the same as positive cash flow, because DSCR counts only PITIA and leaves out vacancy, repairs, and management costs.
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Picture an owner with a lake house booked most weekends. There is no lease anywhere in the file. The question is not “lease or rent study.” The question is which proof of income a lender will accept, and how much it trusts that proof. This article walks through that, step by step. Lendmire’s complete DSCR loans guide covers the basics if the loan type is new to you.
Key Terms Defined
DSCR (debt service coverage ratio): the property’s rent used for lender review divided by its full monthly obligation. That obligation is principal, interest, taxes, insurance, and any HOA dues, known as PITIA.
Rent study: the plain-English label for the appraiser’s market-rent work. Lenders use many names for it, including appraiser STR analysis, STR addendum, and market-data report.
Form 1007 and Form 1025: the standard appraisal rent schedules. Form 1007 covers a single unit. Form 1025 covers two to four units. Both estimate monthly long-term rent.
Seasoning: the waiting period or track record a lender wants before it will act on a property. Here it means ownership time and hosting history.
Cash-out refinance: a new, larger loan that pays off the old one and hands you the difference. A paid-off property still counts, with no payoff to subtract.
LTV (loan-to-value): the loan amount as a percentage of the appraised value.
What Does “Rent Study Instead of a Lease” Actually Mean?
It means the lender is not looking for a signed lease. A lease proves monthly rent from a tenant. A nightly rental has guests, not tenants, so the proof has to come from somewhere else.
There are three realistic sources of that proof:
| Income evidence | Who produces it | Typical use |
|---|---|---|
| Booking history | You, via platform or manager statements | Refinance with track record |
| Appraiser STR analysis | The appraiser | Refinance or purchase |
| Long-term rent opinion | The appraiser (Form 1007 or 1025) | Fallback |
The term “rent study” gets used loosely. Strictly, the appraisal’s rent schedule is a market-rent opinion built on monthly leases of competing homes. Fannie Mae’s appraiser update says Form 1007 was not designed for single-family homes used as short-term rentals. It also calls it incorrect to take a nightly rate and multiply it by 30. That is agency material, cited here only to explain what the form does. DSCR loans are not agency products and follow each program’s own rules.
So if someone promises a “rent study” will prove your Airbnb income, be careful. McKissock, an appraiser-education provider, says the 1007 documents monthly rent, not nightly rent or business income. It adds that an appraiser may need another tool, such as AirDNA, to estimate a short-term rental. Assessing business income is outside the form’s scope.
How Underwriting Treats It, Step by Step
1. Appraisal ordered. The appraisal sets value, and value drives the leverage cap. The same visit produces a long-term rent opinion.
2. Income method chosen. The lender decides what counts: trailing statements, an appraiser’s short-term rental analysis, or the long-term rent fallback.
3. Haircut applied. Gross bookings are not taken at face value under this step. Short-term rental revenue is discounted for expenses and vacancy.
4. Coverage tested. Qualifying income is divided by PITIA on the new, larger loan.
5. Cash-out sized. The loan is the smaller of two numbers: value times the LTV cap, or the loan the rent can support at the required coverage.
6. Payoff and costs subtracted. What remains is your cash.
Step 3 deserves attention. Gross bookings are not the number that gets divided by PITIA. Lenders discount short-term rental revenue first, and each program sets its own haircut, so ask for it by name before you compare programs.
Step 5 is where borrowers get surprised. It is easy to assume the 70% cap decides everything, but the rent can decide first, because a bigger loan means a bigger payment, and the payment eats coverage.
Equity Test vs. Coverage Test
Cash-out is limited by whichever test bites first. The equity test is simple: on short-term rental collateral, the new loan generally cannot exceed about 70% of appraised value. A standard long-term rental reaches about 75%.
The coverage test asks whether your qualifying income covers the new payment at the required ratio. On the short-term rental refinance programs we place, the floor is 1.00. Stronger coverage tends to open better pricing and leverage.
Run the numbers on a modeled property. Say it appraises at $500,000, and you want maximum cash. At 70% LTV the equity test allows a loan sized to that cap. Now suppose your documented, haircut income covers the payment on that loan at only about 0.95x. The coverage test fails first, so the loan shrinks until coverage reaches the floor, or you look at a different income method. Coverage is the binding test. The equity looked fine and the rent did not. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Reverse it. Strong bookings and a modest existing balance might clear 1.00 easily, and then the 70% cap sets your cash. The strongest files clear both tests: enough equity and enough rental coverage.
Compare this with a purchase, where a larger down payment shrinks the loan and therefore the payment, which helps coverage. On a cash-out, you are doing the opposite, pulling equity out and raising the payment. That is why cash-out sizing and coverage fight each other.
Which Income Method Does the Program Use?
This is the question that matters more than any headline feature. Across the network, programs fall into a few patterns:
- Long-term rent only. The 1007 or 1025 decides everything, no matter how well you book.
- Higher of the two. The program takes the stronger of the long-term opinion and documented short-term income.
- Lower of the two. The program takes the more conservative supported figure.
- Short-term documents only. Booking history drives the number.
Some programs skip the hosting-history requirement entirely and use a long-term rent basis instead. That can help a newer owner, but it usually means a lower income figure for a property that books well.
The case against the 1007 is real. HousingWire reports that forcing short-term rental income onto the 1007 often distorts coverage calculations and produces artificially low ratios, even in non-QM and private lending. It also reports that a coming appraisal data standard, UAD 3.6, will retire legacy forms including the 1007. The underlying mismatch between monthly rent and nightly income will remain.
Appraisers have their own workaround. Class Valuation, an appraisal firm, argues that competent short-term rental appraisers report a separately labeled narrative addendum, a Short-Term Rental Projected Income Analysis. If a program accepts that addendum, you get something much closer to a true rent study.
Where the General Rule Breaks
Every rule here has edge cases. These are the ones that change outcomes.
Thin history or a recent conversion. A long-term rental that just became a nightly rental has little track record. Roughly 12 months of hosting history is the common expectation. Some programs fall back to long-term rent, and that may shrink the cash-out.
Booking history matched to bank deposits. On a refinance with history, 12 months of platform or manager statements tied to deposits is the strongest evidence. Statements that do not match deposits invite questions.
Projections versus actuals. If a projection says one thing and your statements say another, the more conservative supported figure may govern. Projections alone are generally a purchase tool.
A lease on a long-term rental. On most DSCR files, the lower of the lease and the 1007 counts. A lease above market adds nothing. If the property is truly a long-term rental, a lease will not rescue an inflated number.
Two- to four-unit properties. These use the 1025, and multi-unit short-term operation can raise extra documentation questions.
Land-use income. Events, hunting, or farm stays do not count. The test is the residence’s rental income.
Paid-off property. It still counts as a cash-out refinance. There is simply no payoff to subtract.
Property types. Manufactured homes (single- and double-wide), log homes, and barndominiums are not offered in these DSCR programs.
Local rules. Short-term rental rules can vary by city, county, HOA, and property type, so investors should confirm local rules before relying on projected rental income.
One practical caution concerns timing. Where an appraiser has little nightly-rental data to draw on, the coverage result may stay unknown until the appraisal returns. Higher-value properties can be hardest to support with comparable data. Ordering the appraisal early and handing the appraiser your platform history, calendar, and nearby comparable listings gives them something to work with.
If the Rent Study Comes in Low
A low number is not the end of the file. You have several moves, and a broker can weigh them across multiple lenders.
- Take a smaller cash-out. A smaller loan means a smaller payment and better coverage.
- Switch income routes. A different program may weigh booking history or an appraiser’s addendum more heavily.
- Wait for history. If you are short of 12 months, more time can change the answer.
- Ask about a separate path below 1.00. On the short-term rental refinance programs described above, 1.00 is the floor. A different select-lender path takes coverage below 1.00 with leverage and terms adjusted.
Notice what does not belong on that list: inflating the number. Lenders compare your statements to deposits and to appraisal data.
What to Prepare
Gather these before the appraisal:
- Twelve months of platform or property-manager statements
- Bank statements showing the matching deposits
- Your current mortgage payoff information, if any
- Insurance and HOA details
- Occupancy calendar and nearby comparable listings
- Entity documents, if the property sits in an LLC, subject to program terms
Credit matters too. Most programs on short-term rentals expect around 640 or better. Loan sizes run up to $3,000,000 on standard programs, and reserves vary by lender, leverage, and loan size.
Clearing 1.00 Is Not Positive Cash Flow
This is the part sales pages skip. DSCR compares income to PITIA only. Repairs, vacancy, management fees, utilities, cleaning, and capital expenses sit outside the calculation.
A nightly rental can clear coverage and still lose money in a slow season. A larger loan from a cash-out makes that cushion thinner. Before you take maximum proceeds, ask what happens if bookings drop for a few months. In our view, the cash-out that leaves room for a bad quarter is usually smarter than the biggest one on offer.
Choosing a Program: Questions to Ask
Because the best program depends on your property, credit, leverage need, and documentation, ask any lender or broker these:
1. Which income method does the program use on a refinance versus a purchase?
2. Does it apply a haircut to gross income, and how large?
3. Does it require hosting history, and how much?
4. What is the leverage cap on short-term rental cash-out?
5. What happens if the appraisal’s rent opinion is lower than my statements?
6. Are my property type and local rules eligible?
A broker that shops multiple wholesale lenders can match your scenario to the program whose income method fits it. That beats shopping on price alone. For the standard long-term version of this question, see Lendmire’s article Best DSCR Cash-Out Refinance Program With a Rent Study Instead of a Lease.
Frequently Asked Questions
Do I need a lease to cash-out refinance a short-term rental?
No. A nightly rental has no lease, so programs that count short-term income use booking history or an appraiser’s analysis instead. Which evidence is accepted depends on the program, so confirm the method before you apply.
Can an appraiser’s rent study prove my Airbnb income?
Not by itself. The standard rent schedule reflects monthly lease comparables, and the lender makes the final income decision. An appraiser’s separate short-term rental analysis can help where a program accepts it.
How much cash can I take out?
On short-term rental collateral, leverage typically tops out around 70% LTV, subject to lender guidelines. The actual amount is the smaller of the equity-based loan and the loan your qualifying income can support at the required coverage, less payoff and costs.
What if I only just started hosting?
Some programs skip that requirement and use a long-term rent basis, which may reduce your cash-out. Waiting for more history is another option.
Does passing the coverage test mean the property cash flows?
No. Coverage compares income to PITIA only. Vacancy, repairs, management, and utilities are outside the calculation, so a file can clear 1.00 and still run thin.
If you are buying or refinancing a rental property and want to see how the numbers work, Lendmire can help you compare DSCR loan options based on the property income, credit profile, leverage, and investor goals.
For how equity extraction works on an investment property, see Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
As a non-QM mortgage broker (NMLS# 2371349), Lendmire facilitates DSCR investor loans across 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed around property-level rental income instead of personal income documentation, subject to lender guidelines, serving LLC-structured portfolios and self-employed borrowers who don’t fit conventional boxes. A two-time Scotsman Guide Top Mortgage Workplace (2025, 2026).
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References
1. Fannie Mae Appraiser Update
2. McKissock
3. HousingWire, Short-Term Rentals Are Breaking the Appraisal Playbook
This article is part of Lendmire’s investment property cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Best Short-Term Rental Cash-Out Refinance Program to Make a Gift to a Child Buying a Home · Can a Grandfathered Airbnb Still Get a Short-Term Rental Cash-Out? · Best DSCR Cash-Out Refinance Program With No Job or Steady Paycheck
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.