How to finance an Airbnb property: Airbnb loans & alternatives

Airbnb currently has over eight million listings worldwide, and the average Airbnb host earned $15,000 in 2024. If you’ve dreamed of owning your own Airbnb property and earning short term rental income, there are several ways to get an Airbnb loan to make that dream a reality.

What is an Airbnb loan?

While there is no branded product called an "Airbnb loan,” investors may use this phrase to describe any loan for Airbnb properties. That might include conventional mortgages, DSCR loans, or a home equity investment, for example.

How to finance an Airbnb: Airbnb lending & alternatives

Here are several ways to finance an Airbnb rental.

Conventional mortgage

A conventional mortgage is the most common way people purchase homes, including investment property loans for Airbnb rentals. To get approved for a traditional mortgage, you’ll need a good credit score, proof of personal income via your tax returns, and typically 20% down if you’re purchasing rental properties. 

The benefit of a conventional mortgage is that you can choose between several loan term options, but the downside is that lenders usually have strict requirements. 

Requirements:

• Strong credit score (often 680+)
• Verifiable personal income
• Typically 20% down for investment properties

Government-backed loans

Government-backed loans can be one of the most accessible ways to finance an Airbnb—as long as you plan to live in the property. Programs like FHA, VA, and USDA loans typically offer more lenient credit requirements and lower down payment options compared to conventional mortgages.

Because these loans are designed for primary residences, they’re often used by aspiring Airbnb hosts who want to offset their housing costs while building rental income (house-hacking). For example, many Airbnb hosts rent out a room or a garage apartment. Some people own duplexes and live in one half of the home, while renting out the other. 

Requirements:

• Must occupy the property as your primary residence
• Meet program-specific credit and income guidelines
• Down payment as low as 0–3.5%, depending on the loan type
• Property must meet government appraisal and condition standards

DSCR loan

DSCR loans are a specific type of short-term rental financing in which lenders determine the loan amount based on a property’s rental income. To be approved for the loan, borrowers typically need a debt service coverage ratio (DSCR) above 1.0. 

Your DSCR is calculated by dividing your property’s net operating income by your monthly loan payment. 

Requirements:

• Down payment of 15–25%
• DSCR above 1.0
• Often requires investor experience
• Higher interest rates than conventional loans

Equity investors

If you want to learn how to buy an Airbnb property with no money up front, you can work with an equity investor. Equity investors are people who provide capital in exchange for a portion of the money you make with your investment. 

Requirements:

• Legal partnership agreement
• Clear profit-sharing terms
• Defined exit or repayment timeline

Portfolio or bank loans for short-term rentals 

Some banks, like credit unions, often maintain their own portfolios of rental property loans. These are generally reserved for individuals who have a good-standing account, an income level, or multiple rental property loans already.

Requirements:

• Down payment between 15% to 30%
• Credit score in the 600–650 range
• Higher allowable debt-to-income ratios than conventional loans, sometimes up to 50%
• Proof of liquid assets may be required, often 6–12 months of reserves

Home equity loan or line of credit

A home equity loan or HELOC can be a practical option if you already own a home and have built up equity. These options let you borrow against the value of your primary residence to fund an Airbnb purchase or cover upfront costs, often with lower interest rates than unsecured loans. 

A home equity loan provides a lump sum, while a HELOC gives you flexible access to funds as you need them. The tradeoff is that your home is used as collateral, so it’s important to feel confident in your cash flow and ability to repay—especially if rental income fluctuates.

Requirements:

• Sufficient home equity 
• A DTI below 43%
• A credit score of 680

Home equity investment

A home equity investment is another way homeowners can utilize their built-up equity to access cash for an investment property. With an HEI, homeowners share a percentage of the future value of their home in exchange for a lump sum. There are no monthly payments. Instead, homeowners repay anytime during a flexible 30-year term when they sell, refinance, or use another source of funds. 

Requirements:

• Sufficient home equity 
• A credit score above 500
• Income is not a factor

Seller financing

Seller financing occurs when the owner of a property decides to act as their own lender when selling a rental property. This is helpful if you want to put down a smaller down payment or need flexibility due to a lower credit score. 

Requirements:

• Seller willing to finance
• Negotiated interest rate and term
• Legal contract outlining repayment

401(k) loan

A 401(k) loan is another option some buyers consider when they need funds for an Airbnb down payment. Instead of borrowing from a lender, you’re borrowing from your own retirement savings, which can make approval feel straightforward and keep interest costs lower. 

The downside to this is that you are borrowing money from your future self. You'll lose out on potential investment gains that you may have received had you left the money in. Additionally, if you happen to lose your job, many workplaces stipulate that the balance is due immediately, which can cause financial stress.

Requirements:

• An employer plan that allow loans
• Typically repaid within five years
• Balance may become due if employment ends

Final thoughts

Buying an Airbnb property isn’t one-size-fits-all—and neither is financing it. From traditional mortgages and government-backed loans to more creative options like home equity, seller financing, or partnerships, each path comes with its own tradeoffs. The right choice depends on your financial profile, risk tolerance, and how hands-on you want to be as a host.