The Quick Read: The two loans use the same coverage math but count different income, so each file moves through a different set of documents and checks. A short-term rental (STR) cash-out refinance is built around hosting history and projected platform income. A long-term rental loan is built around a lease or an appraiser’s market-rent opinion. Both qualify primarily on property-level rental income covering the payment, subject to lender guidelines.
- STR cash-out refinance: up to 70% LTV, a 640 minimum credit score, about 12 months of hosting history, and a 1.00 coverage floor on refinances.
- Long-term rental cash-out: tops out around 75% LTV across most of the network, with about 6 months of seasoning as the common expectation.
- The STR file leans on platform statements. The long-term file leans on a lease or a rent schedule.
- Both programs size the loan by the lower of the value limit and the coverage limit.
- 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. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
The STR path suits an owner whose property earns clearly more as a nightly rental than it would on a monthly lease, and who has the hosting record to prove it. The long-term path suits an owner with a stable lease, a thin or missing hosting history, or a property in a spot where nightly stays are restricted. Neither is better in the abstract. The right pick depends on which income you can document today.
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Side-by-Side
This table covers the structural differences. The long-term column describes published industry norms alongside what Lendmire’s wholesale network commonly sees. Pricing is left out on purpose, because pricing lives in the calculator.
| Factor | STR cash-out refinance | Long-term rental cash-out |
|---|---|---|
| Income counted | Platform history or projection | Lease or market rent |
| Coverage floor | 1.00 on refinances | 1.00 where select programs start |
| Max cash-out LTV | Up to 70% (STR collateral) | Around 75% (standard rental) |
| Credit score | 640 minimum | Around 660 typical; 620 in parts of the network |
| Income documents | About 12 months of host statements | Active lease or rent schedule |
| Rent form from the appraiser | Not the income proof | Often the income proof |
| Seasoning | Varies by program | About 6 months common |
| Local-rule risk | High: permits and bans matter | Lower |
| Timeline | Longer document stage | Shorter document stage |
Entity vesting follows the same pattern on both sides, with LLC ownership available subject to program terms. The credit and seasoning rows for the long-term side reflect typical network ranges, so confirm them against the specific program.
What Does “Income” Mean on Each File?
The core difference is what the lender counts as rent. The coverage test itself is identical. Lenders divide the property’s rental income by PITIA, which is principal, interest, taxes, insurance, and any HOA dues. A result of 1.00 means the rent equals that obligation.
On a long-term file, the income is simple. It is the signed lease, or the appraiser’s rent schedule when the unit is vacant or the lease is stale. On an STR file, the income is harder to pin down. Nightly rates swing by season. Occupancy swings with them. A lender has to choose which number represents a normal year.
Lenders in the network generally handle that in one of three ways. Some want a full year of platform or property-manager statements, backed by bank deposits. Some accept a market-data projection. Some haircut the gross figure to reflect higher operating costs. Which approach applies depends on the program, which is why two STR files on similar properties can produce different coverage numbers.
Why the Appraisal Doesn’t Prove Your Airbnb Income
The appraisal gets ordered on both loans. It just does a different job on each.
On a long-term file, the appraiser reports value plus a market-rent opinion. Form 1007 covers one-unit properties, and Form 1025 covers two to four units. Those rent opinions are based on comparable properties leased by the month. The Fannie Mae appraiser update explains that the 1007 measures monthly market rent and cannot be used to estimate a nightly fee. It also says multiplying a nightly rate by 30 is improper. DSCR loans are not agency products. These forms are simply borrowed formats.
On an STR file, the appraiser still values the real property. That is the job. The rent form is not the income proof. McKissock, an appraisal education provider, notes the form leaves out vacancy and business expenses, so judging business income falls to the lender, not the appraiser.
This matters for one practical reason. A property can fail on the monthly-rent number and still pass on documented STR income. The reverse can also happen. A property with a thin STR margin can look fine on paper and then slip under 1.00 once a lender applies its own adjustment.
From Application to Funding: Where the Two Paths Split
Both loans begin the same way. You submit an application, name the borrower or vesting entity, and confirm the loan is for business purposes. Credit gets pulled. A property address and a rough value anchor the conversation. Up to this point, the files look identical.
The split comes at documents.
Long-term path. The file needs the lease (or a rent schedule), entity papers if the property sits in an LLC, proof of reserves, and the usual identity and credit items. The appraiser’s rent opinion fills any gaps.
STR path. The file adds the income package. That typically means platform statements or manager reports covering roughly a year, plus bank deposits that match. A program with a 12-month hosting expectation will look for that record. If the history is short, the options narrow: a different program, a smaller cash-out, or waiting until the record matures.
Then comes underwriting. On the long-term side, the reviewer confirms the lease, runs the coverage test, and checks leverage against value. On the STR side, the reviewer also tests whether the income is real, steady, and legally allowed. Local permits, HOA rules, and zoning all enter the picture. If the property can’t legally operate as an STR, the income may be refused.
Two Clocks: Seasoning and Hosting History
Investors often blur these into one idea. They are separate.
Seasoning is how long you have owned the property. Across most of the network, about six months is the common expectation on a cash-out. Hosting history is how long the property has operated as a short-term rental with records. The STR program expects about 12 months.
You can pass one test and fail the other. Picture an investor who bought a property seven months ago and started hosting four months ago. Seasoning is fine. Hosting history is short. That file may fit a different structure, a smaller cash-out, or a long-term-rent treatment until the record builds. The same logic runs in reverse for a long-term rental that just converted to nightly stays. Hosting history may not carry over from the old lease.
When a Short-Term Rental Cash-Out Is the Better Fit
Choose the STR path when these conditions hold:
- You have about a year of clean hosting records, with statements that match bank deposits.
- Documented nightly income clearly outruns what a monthly lease would bring in.
- The property is legally permitted to operate as an STR, and you’ve confirmed the local rules.
- Your credit sits at or above the 640 minimum, and ideally higher.
- You can live with the lower leverage ceiling. STR cash-out tops out at 70% LTV. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Here is a quick picture. Say you own a vacation cabin that has hosted for over a year. The appraiser’s monthly-rent opinion comes in low, and a long-term file would barely clear 1.00. The STR income package shows coverage well above that. In this case the STR path gets you the better coverage number, even though the leverage cap is lower.
Keep one honest caution in view. Clearing 1.00 is not the same as positive cash flow. The coverage test compares rent to PITIA only. Repairs, vacancy, management fees, utilities, and capital expenses sit outside it. STR properties tend to carry more of those costs, so a thin ratio deserves a hard look. The complete DSCR loans guide walks through how the ratio gets built.
When a Long-Term Rental Loan Is the Better Fit
Choose the long-term path when these conditions hold:
- You have a signed lease or a property that rents steadily by the month.
- Your hosting history is short, missing, or hard to document.
- Local rules restrict or ban nightly stays, or you’re unsure they apply.
- You want the higher leverage ceiling. Standard-rental cash-out reaches around 75% LTV across most of the network.
- You’d rather not depend on seasonal income swings to hit the ratio. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
A long-term file also carries less regulatory exposure. STR income depends on local permission to operate. A monthly lease does not lean on that to the same degree. If a city tightens its rules, an STR-dependent ratio can disappear overnight, while a lease-based ratio does not rest on that permission.
Some owners test both before choosing. A property that works as both a long-term and a short-term rental gives you options if a program rejects one treatment. Lendmire’s piece How Lenders Underwrite a Short-Term Rental Cash-Out Refinance From Application to Closing goes deeper on the STR review, so this article stays on the comparison.
The Shared Rules That Apply to Both
Several points hold no matter which path you take.
Credit. A 620 floor exists in parts of the network, and most programs want around 660. A score of 700 or higher unlocks the strongest leverage tiers. The STR program starts at 640.
Loan size. Standard programs run up to $3,000,000. Above $2,500,000, the network generally holds to 30-year fixed structures. Balances below the standard-program minimum route through select lenders in the network.
Reserves. They vary by lender, leverage, loan size, and transaction type. About six months of PITIA is common. Conservative files at modest leverage with loans under $1,500,000 can see reserves waived, while loans above that level typically step up to around nine months.
Coverage below 1.00. A separate path exists. Programs below 1.00 are available through select lenders in the network, with leverage and terms adjusted. That differs from the 1.00 floor on the programs described above, which is where many select programs start.
Terms. The spine is the 30-year fixed. Extended terms and interest-only periods are available through select lenders in the network, and ARM structures exist for investors who want them.
Prepayment terms. DSCR loans commonly carry a prepayment penalty, which charges a fee if you pay the loan off early. Check the schedule before you sign, especially if you plan to sell or refinance again soon.
Ineligible property types. Manufactured homes, log homes, and barndominiums are not offered in these DSCR programs.
A larger down payment, or in a refinance more equity, lowers the payment and can lift the ratio. It never erases leverage caps, credit floors, reserve rules, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.
A Note on Business Purpose
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. Cash-out proceeds should serve business purposes. The CFPB’s exam procedures treat credit used to acquire or improve non-owner-occupied rental property as a business-purpose factor. Tax treatment varies; consult a qualified professional.
Which One Should You Pick?
Run the same property through both tests before you decide. Start with the income you can prove today, not the income you hope to earn. Then check leverage, because the STR cash-out ceiling sits at 70% LTV while standard rental cash-out reaches about 75%. Higher leverage means more proceeds, but only if the coverage clears. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
The verdict is balanced. If you hold a year of solid hosting records and the property is legally permitted, the STR path can produce the stronger coverage number and better reflect what the property earns. If your history is short, your rules are uncertain, or you want maximum leverage, the long-term path is the steadier choice. Plenty of owners start long-term and move to STR treatment once the record builds. Neither choice locks you in forever.
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. Lendmire is a broker arranging DSCR financing through select lenders in its wholesale network, across 41 markets including Washington, D.C. All programs are subject to lender guidelines and are not a commitment to lend.
Frequently Asked Questions
Can I do a cash-out refinance on an Airbnb with only a few months of hosting history?
Sometimes, but the options narrow. The STR program expects about 12 months of hosting history. With a shorter record, a file may fit a different structure, a smaller cash-out, or a long-term-rent treatment. Waiting until the record matures is another route. Eligibility depends on the program and the property.
Does the appraisal set my short-term rental income?
No. The appraiser values the real property, and the rent form measures monthly market rent. According to the Fannie Mae appraiser update, that form cannot estimate a nightly fee. The lender decides what STR income to count, usually from platform statements and bank deposits.
Is the maximum cash-out different for a short-term rental than a long-term rental?
Yes. Short-term rental cash-out reaches up to 70% LTV, while a standard long-term rental cash-out tops out around 75% across most of the network. The coverage floor for an STR refinance is 1.00. All figures are typical ranges and subject to lender guidelines.
Does clearing 1.00 mean my property cash flows?
Not necessarily. The ratio compares rent to PITIA only. Repairs, vacancy, management, utilities, and capital expenses sit outside the calculation. A property can clear 1.00 and still run thin once those costs show up.
Can an LLC hold title on either loan?
Generally yes, subject to program terms. Entity papers get added to the document list when an LLC is involved.
A deeper walk-through of investment-property equity extraction lives in Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
A non-QM mortgage broker (NMLS# 2371349), Lendmire arranges DSCR financing for real estate investors in 41 markets — 40 states plus Washington, D.C. Because deals are underwritten primarily on property cash flow rather than personal income documentation, the structure suits self-employed buyers and entity-owned portfolios. Lendmire places loans through wholesale investor lenders; it is not a direct lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae Appraiser Update, June 2024
2. McKissock
3. CFPB Truth in Lending Act Exam Procedures
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: Can a Furnished Mid-Term Rental Qualify for a Short-Term Rental Cash-Out? · Banks That Offer a Short-Term Rental Cash-Out Refinance to Consolidate Debt · Can a DSCR Cash-Out Refinance Remove an Ex From the Rental’s Loan?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.