Ready to find your highly profitable Airbnb? Enter your details below...
We don’t focus on rental arbitrage, hotels, or glamping.
If that’s your focus, this call likely isn’t the right fit.
What would you prefer to do? *
As a high-earning professional, you know the power of smart investments. You've seen the Airbnb headlines and wonder how to turn that potential into a real asset. The biggest hurdle is financing.
Can you use a conventional loan for an Airbnb? Yes, but the path and terms depend on one factor: your occupancy strategy. There are three pathways: living in it (primary residence), using it as a vacation home (second home), or purchasing it as a business (investment property).
This guide will break down these three paths, explain the rules, and help you choose the right strategy for your financial goals. At STR Search, we specialize in helping high-income earners navigate this process. We use data-driven analysis to ensure your short-term rental investment is positioned for success from day one.
A conventional loan is a mortgage not insured or guaranteed by the federal government, unlike FHA, VA, or USDA loans. These loans conform to Fannie Mae and Freddie Mac guidelines and represent the most common type of mortgage in the US, accounting for roughly 64% of all mortgage applications.
Investors prefer conventional loans for their flexibility and broader availability for various property types, including second homes and investment properties. They offer competitive interest rates for qualified borrowers and avoid specific program restrictions of government-backed loans, such as permanent mortgage insurance (FHA loans).
From a lender's perspective, your property's classification correlates with their perceived risk. Owner-occupants (primary residence) are viewed as the lowest risk – people are less likely to default on the mortgage for their home. Second homes represent moderate risk, while investment properties are the riskiest loans, as they are business assets owners might abandon if the economics turn unfavorable. This risk assessment impacts your down payment requirements, interest rates, and qualifying criteria.
A lender will use three classifications for a residential property:
Let's break down the conventional loan requirements and strategic considerations for your potential short-term mortgage.
This strategy involves buying a home to live in as your primary residence for at least a year. During that time, you can rent out parts of the property, like a spare bedroom, basement apartment, ADU (Accessory Dwelling Unit), or the entire house when you travel. This approach is called "house hacking" and represents the lowest barrier to entry for Airbnb financing.
The most favorable loan terms are for primary residences:
When closing on a primary residence loan, you'll sign an occupancy affidavit. This is a legal document stating your intent to occupy the property as your main residence within 60 days of closing and to continue for at least 12 months. This is a legally binding declaration.
The standard occupancy clause requires you to live in the property for at least one year. After that, you can move out and convert the property to a full-time rental. Many successful real estate investors have built portfolios by living in each new property for a year, then moving to the next one, effectively "house hacking" their way to multiple properties with favorable financing terms.
For mortgage purposes, a second home is defined as a property the borrower intends to occupy part of the year for recreational purposes. The property must qualify for second home financing:
A second home mortgage has less favorable terms than a primary residence but better than an investment property:
The "Gray Area": While Fannie Mae and Freddie Mac guidelines allow rental income on a second home, individual lenders impose "overlays" or stricter policies. Some lenders approve a second home loan knowing you'll rent it part-time on Airbnb, while others prohibit it in their loan documents.
Be transparent with your lender about your intent to use it as an STR and seek an STR-friendly lender. Many borrowers have secured second home loans for properties they use personally part of the year and rent out, balancing a vacation home and an income-producing asset. This approach works well in top vacation rental markets.
The investment property approach is for buying a property you don’t intend to live in. It’s a business asset purchased for generating income and/or appreciation. This is the most straightforward and transparent approach for a dedicated Airbnb property.
An investment property loan comes with the strictest terms:
The advantage of the investment property approach is that Fannie Mae guidelines allow lenders to use a portion (typically 75%) of the property's projected rental income to help you meet DTI requirements. This can be a game-changer if you are targeting a high-income vacation rental property.
To leverage this, you'll need a Small Residential Income Property Appraisal Report (Fannie Mae Form 1025), which includes a market rent analysis. The appraiser will determine the fair market rent based on comparable rentals in the area.
Getting this projection right is critical, so a data-driven STR market analysis is non-negotiable. The more accurate your income projections, the better your chances of qualifying for the loan and ensuring your investment performs as expected.
Occupancy fraud occurs when you misrepresent a property's intended use to the lender to secure better loan terms. This involves telling a lender you'll occupy a property as your primary residence or second home when you plan to use it exclusively as a rental from day one.
The consequences of occupancy fraud are severe and can destroy your financial future:
You can finance your Airbnb with conventional loans, as outlined above. The short-term gain from misrepresenting your intentions isn't worth the long-term consequences. Build your real estate empire on a foundation of honesty and transparency.
Yes, you can use a conventional loan for an Airbnb property. The key is to choose one of the three legitimate paths: primary residence, second home, or investment property, and be transparent with your lender about your intentions. Each approach has distinct advantages and requirements, and the best choice depends on your financial situation, investment timeline, and personal goals.
Securing Airbnb financing is not an obstacle, but the first step in a successful investment journey, with the right knowledge and partner. STR Search's data-driven approach ensures you get a property that will perform exceptionally in the short-term rental market. Start your journey by exploring potential markets with STR Search experts.
Honesty is the best policy. Being upfront helps you find an STR-friendly lender for a second home or investment property. For a primary residence, your intent is to occupy it as required (typically for at least a year), which is what you state. After that, you're free to convert it to a rental. Always review your loan documents, as terms vary.
Yes. After you fulfill your initial occupancy requirement (usually one year), you can move out and refinance the property with an investment property loan. This can free up your primary residence status for another purchase, allowing you to repeat the process. Keep in mind that investment property refinances typically require significant equity (often 25%+) and higher credit scores.
Lenders want 6-12 months of PITI (Principal, Interest, Taxes, and Insurance) payments in reserve after your down payment and closing costs. For a property with a $2,000 monthly PITI payment, that means having $12,000-$24,000 in accessible funds. This shows you can cover expenses during vacancies or unexpected maintenance, reducing the lender's risk.
Trusted by hundreds of successful investors
We’ve spent years analyzing what works so you don’t have to. Our job is to cut through bad data and help you make smart, profitable decisions backed by real numbers.
Schedule Your Free Call
