The Quick Read: On a purchase, the lender can use a third-party income projection, such as AirDNA’s Rentalizer, in place of a booking history. The projection is discounted before it enters the coverage math, and credit, reserve, and leverage rules still apply in full.
- A projection stands in for the property’s missing track record on a purchase. Refinances of operating rentals generally need actual platform history.
- The lender discounts the projection, so the coverage figure is lower than the one on the report.
- On short-term-rental purchases, leverage tops out at 75% LTV on the strongest files, with a 640 minimum credit score.
- Clearing the coverage test is not the same as making money. Repairs, vacancy, cleaning, and management sit outside the calculation.
Key Terms Defined
DSCR (debt service coverage ratio): the property’s monthly income divided by its monthly housing obligation. That obligation is PITIA: principal, interest, taxes, insurance, and any HOA dues or assessments.
Projected STR revenue: a software estimate of what a specific address should earn on platforms like Airbnb and Vrbo, based on nearby listings.
ADR (average daily rate): the average nightly price a rental actually collects.
Occupancy: the share of available nights that are booked.
Comp set: the group of nearby listings a report treats as comparable to your property.
Haircut: the discount a lender applies to a projection before using it as qualifying income.
LTV (loan-to-value): the loan amount as a percentage of the property’s value.
Why a Projection Can Stand In for History
A projection works because a DSCR loan qualifies the property, not the person. The question is whether the property’s income can cover its own payment. A lease answers that for a long-term rental. A short-term rental with no bookings has no lease and no statements, so the lender needs another source of income evidence.
DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. Your paycheck and traditional personal-income documentation is not the center of the file. The property’s rental income covering the payment is, subject to lender guidelines.
Here is where history normally comes in. On a refinance, the property has been operating, so lenders in the network want actual platform statements. On a purchase, there is nothing to show. A market-based projection, or an appraiser’s STR analysis, fills the gap. That is the whole idea behind qualifying with a projection instead of history.
How Underwriting Treats the Projection, Step by Step
The lender never takes the report at face value. Here is the sequence most files follow.
1. Confirm the transaction. A purchase with no usable operating history is the case where a projection applies. A refinance of a working STR generally requires real booking records.
2. Pull an address-level report. VaultSTR explains that Rentalizer is AirDNA’s address-level estimator. It outputs projected annual revenue, ADR, and occupancy.
3. Check the comps behind it. As Haus Vacation Rentals explains, AirDNA and similar tools match nearby listings, mostly by bedroom count and location. Then they project those listings’ results onto your address. The software has not seen your photos, your layout, or your amenities.
4. Apply the discount. The lender reduces the annual gross figure by a factor. That factor varies by lender, and select lenders in the network each set their own. The result is divided by 12 to get monthly qualifying income.
5. Divide by PITIA. Qualifying income over the full monthly obligation gives the coverage ratio.
6. Test the ratio against program rules. On STR purchases, the network’s programs start at a 1.00 floor. Your credit score, reserves, leverage, and property type then decide the outcome.
7. Run the appraisal in parallel. The appraisal sets value. A lender may also use the appraiser’s rental opinion as a cross-check.
Reports do not all carry equal weight. Practitioners watch five things: comp quality, report freshness, the market score, the size of the discount, and the PITIA at your requested loan amount. A strong report on a weak comp set is still a weak file.
Three Ways to Document STR Income
Each income source fits a different situation. A projection is not the only route, and it is not always the best one.
| Source | When it applies | Main limit |
|---|---|---|
| Market projection | Purchase, no history | Discounted by the lender |
| Appraiser STR analysis | Supplement or alternative | Depends on appraiser’s method |
| Actual platform history | Operating STR, refinance | Not available on a first purchase |
Some lenders in the network will fall back to long-term market rent from an appraisal rent schedule when STR projections are unavailable. That changes the income basis entirely. Coverage then rides on what the property would rent for on a lease, which can land well above or below the STR number depending on the market.
Agency appraisal rules show why STR income needs its own data source. Fannie Mae’s appraiser guidance says a Form 1007 rent schedule must be supported by monthly lease comps. It also says the appraiser must not multiply a nightly rate by 30. The form cannot estimate the nightly fee for an STR at all. That is agency appraisal practice, not how DSCR programs work. It explains why lenders turn to STR-specific data instead.
The Three-Number Problem
Every first-time STR file has three numbers, and they are rarely the same.
| Number | Who owns it | What it answers |
|---|---|---|
| Buyer’s model | You | Does this deal fit my plan? |
| Underwritten figure | The lender | Does the property cover its payment? |
| Real-world result | The market | What did the first year actually pay? |
Run a modeled example, using assumed inputs rather than any network or market figure. Say the raw projection implies coverage of about 1.25x. Now assume a lender applies a discount of roughly one-fifth. The underwritten coverage falls to about 1.00x, right at the floor for STR purchases. Same property, same report, very different cushion.
Now flip it. Suppose the raw projection implies about 1.50x. After the same assumed discount, coverage lands near 1.20x. That file has room if the report softens or the appraisal comes in light.
Your own model should be harsher than the lender’s. VaultSTR suggests that a first-year operator should model year one at a discount to the Rentalizer figure. That is the vendor’s own working rule, not an industry standard. It still makes sense. The report cannot see your management skill, and a first-year host rarely matches a seasoned one.
One more point: DSCR compares rent to PITIA only. Clearing 1.00 does not mean the property produces positive cash flow. Cleaning, platform fees, utilities, furnishings, vacancy, and repairs all sit outside the ratio. Treat the coverage number as a gate to the loan, not a forecast of profit.
Where the General Rule Breaks
The projection logic holds in typical markets. It bends in a few named situations.
Thin or rural markets. BNBCalc’s review says a property-level number can land well off in either direction when few comps exist. Its advice is to treat the figure as a midpoint and discount it. That comes from an analytics vendor, not an independent audit, but the logic is sound. Fewer comps means more guesswork in the report.
Dense, similar markets. The Haus analysis suggests estimates tend to be more reasonable where many near-identical units compete, such as a condo building full of STRs.
Misleading occupancy. An investor discussion on BiggerPockets includes a Southwest Florida commenter who found nightly rates fairly accurate but reported occupancy unreliable. Operators fill gaps through channels that do not show up in the data. VaultSTR adds that blocked calendars can read as demand. Check the occupancy figure hardest.
Market-level versus address-level accuracy. A high accuracy figure circulates in investor discussions of AirDNA data. It describes market-wide supply and revenue totals. It says little about a single address. Do not carry the headline number onto your one property.
Declining markets. One poster in that thread says lenders accept AirDNA mainly in markets that are not declining. That is anecdotal, but it matches the logic. A shrinking market makes a trailing-comp projection optimistic.
Experience overlays. The projection removes the property-history requirement. It does not remove the borrower side. STR files in the network usually expect about 12 months of landlord or host experience. How a first-timer meets that varies by program and lender, so raise it before you pick a property. Plan to document credit of 640 or better and reserves, which commonly run around 6 months of PITIA but vary by lender, leverage, and loan size.
Multi-unit properties. Some programs want a report for each unit. Confirm that before ordering a single report on a fourplex.
Property type. DSCR on manufactured homes, log homes, and barndominiums is not offered through the network, no matter how strong the STR projection looks.
What the Decision Looks Like in Practice
Think of the process as a short workflow you run before the lender ever sees the file.
1. Pull the report and read the comps. Do the listings match your bedroom count, location, and amenity level? Remove comps that are clearly better or worse than your property.
2. Stress the number. Cut the projection the way the lender will, then cut it again for a first-year operator.
3. Check the coverage. Divide your stressed income by the full PITIA at your intended loan size. On a purchase, STR leverage tops out at 75% LTV on the strongest files, and a larger down payment lowers the monthly obligation. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
4. Decide whether it still works. If the deal only clears at the full report figure, the margin is too thin.
5. Confirm 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.
6. Take the file to a broker. Select lenders in the network apply different discounts and different experience overlays, so comparing them matters. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
When the projection comes in low, you have levers. You can negotiate the price down, since a lower price lowers the loan and the payment. You can add down payment, which lowers PITIA and lifts the ratio. You can review the comp set for bad matches and ask for a fresh report. You can also ask whether an appraiser’s STR analysis would support a higher figure.
If the discounted number lands below 1.00, you are not necessarily done. 1.00 is where STR purchase programs in the network start. A separate path through select lenders takes coverage below 1.00, with leverage and terms adjusted. Qualification stays subject to lender guidelines, credit approval, and property review.
A larger down payment never erases the other rules. Leverage caps, credit floors, reserve requirements, and property eligibility still apply. The strongest files clear both tests: enough equity and enough rental coverage. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
If you buy through an LLC, the vesting question comes up early. For the full picture of how these loans work, see the complete DSCR loans guide.
Treat the projection as a way into the loan, not as proof the deal works. VaultSTR notes that Rentalizer-type tools are better at ranking addresses against each other than predicting exact revenue. Compare properties with it, then underwrite the one you pick with your own conservative numbers.
Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
Frequently Asked Questions
Do I need rental history to buy a short-term rental with a DSCR loan?
Not on the property itself. On a purchase, a third-party projection or an appraiser’s STR analysis can supply the income evidence. The borrower side is separate. STR files usually expect about 12 months of landlord or host experience, and programs differ on how they treat a first-timer.
Why is the lender’s income lower than the AirDNA number?
The lender applies a haircut before dividing by 12. Projections are estimates built from nearby listings, and they cannot see your specific home or your management. Each select lender in the network sets its own discount, so the qualifying figure always sits below the raw report.
Can I use a projection on a refinance?
Generally no. A refinance of an operating STR relies on actual platform history, because real bookings exist to document. On a refinance, STR leverage reaches up to 70% LTV with a 1.00 coverage floor. Cash-out on short-term-rental collateral also tops out at 70%.
Can the appraiser change the number?
It can influence the file. The appraisal sets value and may offer a rental opinion that a lender uses as a cross-check. A Form 1007 rent schedule rests on monthly lease comps and cannot establish a nightly STR fee, so STR-specific data still does the heavy lifting.
Is a paid analytics tool required?
Lenders in the network typically want a recognized third-party report, and AirDNA is the common one. For your own screening, any tool works as long as you read the comps and stress the output. The report’s quality matters more than its brand.
Next Step
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. As a broker, Lendmire arranges financing through select lenders in its wholesale network across 41 markets, including Washington, D.C. Programs change and every file is underwritten individually, so this is not a commitment to lend. Reach the team at 828-256-2183.
Investors focused on short-term rentals can review DSCR loans for Airbnb and short-term rentals.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage built around DSCR investor lending, with programs available in 41 markets, including Washington, D.C. DSCR lenders commonly evaluate rental-income coverage instead of personal income paperwork — a practical fit for LLC-owned and multi-property investors. Terms vary by lender, property, leverage, and program. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
3. Fannie Mae appraiser update (excerpt, Nevada Real Estate Division)
5. BiggerPockets forum: AirDNA accuracy
This article is part of Lendmire’s short-term rental loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Choose DSCR or Conventional for Your First Airbnb · How to Pick a First Airbnb Loan With No Operating History · How to Run STR Loan Numbers on a Condotel for a Resort Buyer
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.