Using Airbnb Income to Secure a Mortgage: How Lenders Approach The Situation

A new concept has hit the real estate market.  Many first-time home buyers, or those looking to make extra money, are buying properties that have a layout that allows them to rent out part of the home.  Thanks to the rise of platforms like Airbnb, short-term rental properties are becoming more popular. Those that plan on using the income from renting out part of their property are changing the way buyers look at properties.

Single-Family Versus Two-Family

There is a difference between a single-family property being used by the homeowner and a renter at the same time versus a two-family property that is made for this situation.  The zoning plays a role in calling a property a multi-family property. For lenders to consider a property a multi-family property it must have the right zoning.

Using Rent as Income

Those that are looking for properties to make extra money in rent to cover part of their mortgage will have a hard time convincing a lender of this potential income.  This income is not already being made, there is no proof it will be lucrative, and there is no telling how long renters will stay in a home.

For the amount of rent to be charged to potential renters, the property should be appraised.  When a lender is in the mix to consider the rental income of a property this appraisal is going to play a huge role in the process.  The appraisal will show the market value of the property and the lender will only consider seventy-five percent of this for potential income.

Lenders May Refuse to Acknowledge Short-Term Renters

There is no telling if a lender will allow a short-term renter to be considered when applying for a loan until the process is underway.  Lenders have to evaluate the property. If it is not zoned properly they will immediately throw the idea out the window and their decision will only be based on the buyer’s income.

Even though a single-family home may not have the consideration of renters, that does not mean that a homeowner cannot use that rent towards their mortgage.  Any homeowner has the ability to rent out a room, a portion of their house, or their entire property to a renter. That money can go towards a mortgage or bills if the homeowner chooses.

Something to consider is the amount of money being brought in from the rental income.  When using short-term renters a lender who will consider the income may deny refinancing applications or even charge more in interest if the amount coming in is too much.  Renting out the property is a business and the lender will take this into consideration.

Renting out a property or a portion of a property is all about the work the homeowner is willing to put in and about the laws in their area.  Each area will have different guidelines for how rental properties need to be handled. Anyone who is willing to take on this responsibility is able to make some extra cash on the side.  This can help them to afford a larger home or even to pay off their mortgage early.