Guide to the Best Airbnb Mortgage Lenders

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Contributor, Benzinga
December 6, 2023

Jump straight to it: The best mortgage lender for an Airbnb is New American Funding.

'Airbnb Inc. is a popular platform for homeowners to rent out their properties to travelers. As the popularity of Airbnb continues to soar, so does the interest of mortgage lenders that specialize in lending for Airbnb properties. Whether you are looking to purchase an investment property to rent out on Airbnb or you're already an established host, identifying the right mortgage lender can be crucial to your success.

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Best Airbnb Mortgage Lenders

4 Best Airbnb Mortgage Lenders

Try not to stress about taking out a mortgage for an Airbnb rental property — it’s actually a good idea. When a property is rented out and creates an income stream, it is an asset instead of a liability. Monthly mortgage payments make a difference. Jumbo loans could be difficult to acquire in some places and down payments for conventional loans usually rise to 20%.

Taking out a mortgage for a rental property also frees up any other money you may have for other investments, allowing you to start quickly and not go bankrupt while building your investment portfolio. In addition, mortgage interest on a rental property is completely tax-deductible. 

While it can be difficult to get approved for a traditional loan when pursuing a short-term rental property, it is possible, and now there are more options available than ever before. Here is a list of reliable lenders to look into for your Airbnb mortgage, offering flexible terms and alternative lending methods:

1. Best for a Variety of Options: New American Funding 

At New American Funding, loan officers realize that the returns on real estate investing can be significant and that the experience can be rewarding. They encourage investing and offer advice as well as creative loan options. 

They offer a wide range of downpayment options, including a home equity line of credit, life insurance policies and cash-out refinance on your current home. As little as 15% down is needed, with better interest rates offered with 25% down.

You can also have exclusive portal to track your loan and application and have all of your information on one easy-to-use site.

Pros

  • Fast loan processing and approval
  • Online mortgage application options
  • Personalized customer service

Cons

  •  Limited physical branch locations
  • Income and credit requirements may be strict for some borrowers

2. Bet for Self-Employed Borrowers: CrossCountry Mortgage

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    Available in: CA, CO, CT, DC, FL, GA, IL, MD, MA, MI, NH, NJ, NY, NC, OH, PA, RI, SC, TN, TX, VA, WA 

CrossCountry Mortgage offers a variety of alternative documentation methods. Experienced professionals walk you through your options so you can make a well-informed decision on what the best financing solution is for you. 

If you are after the investor cash-flow loans, you will not be required with a debt-to-income check or employment verification — just what the cash flow will be from the property when rented. The projected gross rent must be greater than the mortgage payment, including all fees, insurance and taxes.

Your other loan options include bank statement loans, 1099 only, asset qualifier and full-documentation loans.

Pros

  • Competitive interest rates and loan terms
  • Personalized customer service
  • Handles both purchase and refinance transactions

Cons

  • Limited physical branch locations

3. Best for Flexible Mortgage Options: Angel Oak Mortgage Loans

Angel Oak Mortgage Solutions is a full-service mortgage lender offering traditional and portfolio Non-QM mortgage loans. Their Investor Cash Flow loan specifically for real estate investors is one of their most utilized loan products. This investor cash flow product does not require income, tax returns or employment information. This financing option qualifies on the expected rent or cash flow of the property. 

They offer flexible options for borrowers looking to secure a loan ranging from $75,000 to $1.5 million. The loans also accommodate properties held in an LLC's name, making it convenient if you prefer this ownership structure. There is no limit on the number of properties that can be financed, and non-warrantable condos are also eligible.

Angel Oaks Mortgage Solutions offers different types of loans, including purchase, cash-out, and rate-term refinance options. You also have the option to choose a 40-year fixed interest-only loan, providing even more flexibility and tailored solutions to meet your needs.

Pros

  • Specialized mortgage options for borrowers with non-traditional income and credit profiles
  • Competitive interest rates
  • Flexible underwriting guidelines and loan programs to meet unique borrower needs

Cons

  • Higher interest rates and fees
  • Provide additional documentation and meet stricter requirements

4. Best for Online Mortgages: Rocket Mortgage

Rocket Mortgage, previously known as Quicken Loans, offers convenient and simple financing. Its goal is to have the quickest loan application, find the right mortgage for your specific needs and dedicate time to work with you through the whole process for a seamless experience during an otherwise stressful time. As a mortgage provider, they prioritize delivering exceptional service to every homebuyer, ensuring the best mortgage rates.

Small Business Administration loans are offered if you decide to make a career out of real estate investing. This type of loan is focused on your business plans and track record more than your credit score and debt-to-income ratio.

A 15% downpayment is acceptable for a 680 credit score on a single-unit investment property, while 25% is required for a 620 or higher credit score on a two- to four- family investment property. 

Federal Housing Administration (FHA) Loans are available for owner-occupied rentals of up to four units if you are considering living in your investment property for at least a year. 

Pros

  • Streamlined application process
  • Ability to compare multiple loan options easily
  • Transparent pricing and fees

Cons

  • Less flexibility in negotiating terms and rates
  • Reliance on technology, which may not be accessible for all individuals

Airbnbs as an Investment Property

Airbnb rentals have been growing in popularity recently, with more people open to traveling but less desire to stay in overcrowded hotels. Indulging in a home-away-from-home vacation rental is more worthwhile, making Airbnbs a great form of passive income for savvy investors. To get started, the first step is understanding how to obtain a mortgage for an Airbnb property and which Airbnb mortgage lenders offer the best loan terms for your situation.

Before purchasing a property to rent out as an Airbnb, be sure you understand your state and city’s regulations as well as restrictions a homeowners’ association may have in place. You can also reach out to a mortgage broker or use a mortgage calculator to learn what your options are.

How to Find an Airbnb Mortgage Lender in 3 Steps

Are you considering buying a property to use as an Airbnb rental but need to secure financing to make it a reality? If so, you’ll need to work with a mortgage lender. Mortgage lenders specialize in providing home loans to buyers, and they can help you determine how much you can afford and what type of loan is best for your situation.

Take a look at some critical tips for finding the best Airbnb mortgage lenders.

1. Compare Mortgage Brokers and Loans

When searching for a mortgage lender for your Airbnb property, it's crucial to compare rates and loan options. Lenders may have different interest rates, down payment requirements and mortgage terms. Some may specialize in investment property loans while others offer home equity loans. Some may also have specific requirements regarding the property's location or rental income. Taking the time to research lenders and compare their offers can help you find the best mortgage for your needs.

2. Get Your Documents Organized

Before you can apply for a mortgage loan, you’ll need to gather several documents to provide to your mortgage provider. This includes your income and employment documentation, tax returns, bank statements and credit reports. These documents are needed to prove your creditworthiness, income and ability to make mortgage payments on time.

3. Consider Various Types of Mortgage Loans

You'll want to explore the different types of mortgage loans available to you. It may be worthwhile to consider a variety of financing options such as home equity line of credit (HELOC), a business loan or an investment property loan. Talk to your lender about the various loans available to real estate investors.

You may want to look for a mortgage lender that offers flexible Airbnb loan options. Airbnb properties are unique in that the income potential can fluctuate from week to week or month to month, so it may be worthwhile to find a lender that offers loan options that can accommodate this variability.

How Much Do Airbnb Hosts Make?

How much you charge per night, how desirable your Airbnb is and the location, will determine how much you can make as an Airbnb host. The ideal location is in a vacation or resort area, near a landmark or college campus or in a popular walkable city. Many hosts charge $100 to $500 per night, with others charging significantly more for luxury accommodations. You can make your mortgage in a week or two depending on the area and amenities.

Using a mortgage on your Airbnb rental property allows you to get started quickly and start earning money to invest in more rental properties. Putting just 15% down can set you up to have a profitable investment with little prior knowledge or cash flow. Start learning the rental market, saving for the down payment and setting up your passive income.

Remember, Airbnb listings for short-term housing can make money, but that money goes into your mortgage payments and maintenance costs before it turns into pure profit.

Are Airbnbs Profitable?

The past year was a record year for Airbnb. Revenue grew by 40% year-over-year in 2022 approximating $8.4 billion. Visitors are staying for weeks, months and even entire seasons now that many jobs are flexible and travel has strengthened.

Choose the right location, a decent nightly price and consider your cost factors as the host — there are fees and taxes set by Airbnb plus normal maintenance on your rental property.

So yes, Airbnbs are profitable if you take the time to make a smart investment and find the right Airbnb mortgage lender.

Choosing the Right Airbnb Mortgage Lender

When it comes to financing your Airbnb property, choosing the right mortgage lender is crucial for your success as a host. The best Airbnb mortgage lenders understand the unique needs of short-term rental investors and offer loan options tailored to your specific requirements. You can benefit from competitive interest rates, flexible loan terms, and streamlined application processes that cater to the dynamic nature of short-term rentals. With a vacation rental property, finding the right rental financing is key.

Frequently Asked Questions

Q

Can I get a mortgage to purchase an Airbnb rental property?

A

Yes, there are some lenders that specialize in providing mortgage loans for Airbnb rental properties. These lenders usually require a higher down payment and may charge higher interest rates because of the risk associated with short-term rental properties.

Q

What documents do I need to provide to the lender when applying for an Airbnb mortgage?

A

When applying for an Airbnb mortgage, you may need to provide documentation, including tax returns, bank statements, rental income history and a business plan for your Airbnb property.

Q

What are the potential risks associated with getting an Airbnb mortgage?

A

The main risk associated with getting an Airbnb mortgage is the potential to face financial difficulties if the property is not rented consistently. Airbnb market regulations also may change, and some cities may impose restrictions that could make renting the property more challenging in the future. It’s essential to assess these risks before taking out a mortgage for an Airbnb rental property.

Get Ready for Take Off

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You can work at your own pace and someone is always there to answer your questions — 24 hours a day, 7 days a week. Want a fast, convenient way to get a mortgage? Give Rocket Mortgage® a try.