What is a short-term rental DSCR loan?
DSCR stands for debt service coverage ratio. It is a simple comparison: the rental income a lender accepts for the property, divided by the full monthly housing payment (principal, interest, taxes, insurance and any HOA dues, often shortened to PITIA). A ratio above 1.00 means the property earns more than the payment. A ratio under 1.00 means it earns less.
A short-term rental version of the loan applies that same test to a home rented by the night or week on platforms like Airbnb and VRBO. The difference is the income. Long-term rentals have a lease and a predictable monthly rent. A Scottsdale vacation home has bookings that rise in the cooler months, dip in the hottest weeks and change with events. Wholesale lenders handle that variability in different ways, which is why shopping the program matters as much as shopping the price.
These are business-purpose loans. They exist for investors who buy or hold homes that no owner or family member lives in. If you plan to use the home yourself for part of the year, this is not the right loan, and we do not arrange the consumer products that would fit.
How do lenders count short-term rental income?
There is no single method. Across the wholesale programs we shop, you will usually see one of three approaches:
- Actual booking history. The lender reviews 12 months (sometimes less) of platform payout statements or a management company's owner statements, then averages the income. This suits seasoned listings.
- A market-data estimate. For a new listing, some programs accept a third-party short-term rental income projection or an appraiser's STR rent analysis for the address.
- Long-term market rent only. Some programs ignore short-term income and use the appraiser's opinion of what the home would rent for on a 12-month lease.
The same house can produce a very different ratio under each method. A Scottsdale home that clears the payment comfortably on booking history may fall short on long-term rent. That is why we start with the income method, then compare pricing and terms. Run your own numbers in the STR DSCR calculator to see how sensitive your deal is.
A worked DSCR example with Valley-style inputs
Say you are refinancing a three-bedroom Scottsdale home that has been on a booking platform for over a year. The lender averages the payout statements and accepts $5,400 a month of income. Your proposed payment breaks down like this: principal and interest of $3,300, property taxes of $250, an STR-use insurance policy at $260, and HOA dues of $90. The total payment is $3,900.
The ratio is 5,400 / 3,900 = 1.38. The property covers its payment with room left over. If the same lender instead used long-term market rent of $3,600, the ratio would be 3,600 / 3,900 = 0.92, which many programs would decline or price differently. Same house, same loan, different answer: the income method decided it.
These figures are a math illustration using user-style inputs, not a quote or a loan offer. Your numbers will differ.
What does a Valley STR file need beyond a normal rental file?
Lenders review the income. The city reviews whether you are allowed to earn it. A complete Phoenix, Scottsdale or Tempe short-term rental file usually includes:
- The address, property type and HOA status, with the CC&R or condo rental clause if there is one.
- Your Arizona transaction privilege tax (TPT) license number for the property, or proof that you applied.
- The city STR permit (Phoenix) or license (Scottsdale and Tempe), or its application status.
- Income evidence that matches the program: payout statements, a management owner statement, or a market-data estimate.
- An insurance quote that covers short-term rental use.
- The purchase contract or current mortgage statement, and LLC documents if you hold title in an entity.
- Your confirmation that no owner or family member will live in the home.
Our Arizona STR permit checklist walks through each item and when to start it.
Which loan purposes can you use it for?
The core STR DSCR loan supports three purposes. Each has its own page with the details that matter in the Valley:
- STR purchase loans for buying a Phoenix, Scottsdale or Tempe home you plan to list.
- STR cash-out refinance for pulling equity from a seasoned listing for business purposes.
- STR rate/term refinance for replacing an existing loan without taking cash out.
If you hold several Valley listings, see multi-property STR financing for how investors finance more than one home.
How the broker process works
Loan Daddy LLC is a mortgage broker, not a lender. We arrange and shop financing from wholesale lenders; the lender you choose underwrites the file and makes the credit decision. Here is the order we work in:
- You send the scenario at /apply: city, HOA status, how the home rents today, and the loan you want.
- We match the income method to programs that read STR income in a way that fits your file, and we tell you plainly if the deal only works on long-term rent.
- We line up compliance documents (TPT, city credential, insurance, HOA rules) so they do not stall underwriting.
- You choose a program, the wholesale lender underwrites, and the lender makes the loan.
Quick questions
Can I use Airbnb income to qualify for a DSCR loan in Scottsdale?
Often, yes. Some wholesale programs accept 12 months of platform payout history, some accept a market-data estimate for new listings, and some count only long-term market rent. The Scottsdale STR license and an Arizona TPT license still need to be in place for the income to count.
Do I need tax returns for an STR DSCR loan?
Usually not for income. DSCR programs qualify the property on its rental income. Lenders still review credit, assets and reserves, and they ask for property documents such as booking statements, the city credential and insurance.