STR Loan Shopping: 5 Questions Every Investor Should Ask Their Lender

Buying a short-term rental (STR) isn’t just about finding the right property — it’s about securing the right loan that doesn’t crush your cash flow. Whether you’re eyeing a coastal bungalow in St. Augustine or a mid-century gem in Jacksonville’s Springfield, your lender is one of your most important partners.

But too many investors treat lenders like vending machines. Punch in a number, get a loan. That’s a mistake — and a potentially expensive one.

Here are the 5 most important questions to ask your lender before you sign anything, plus why they matter and how they’ll impact your short-term rental business.

1. “Do you offer loan products designed for short-term rentals?”

Not all loans are created equal — especially when it comes to financing properties that generate nightly income.

Many conventional lenders are still stuck in the long-term mindset: they want W2 income, debt-to-income ratios, and long leases. That’s fine for a primary or long-term rental… but STRs are different beasts.

Here’s what to ask:

• Do you offer DSCR (Debt Service Coverage Ratio) loans?

• Do you finance non-owner-occupied properties with STR income?

• Are you familiar with Airbnb/VRBO rental comps or tools like AirDNA?

A lender who gets STRs won’t flinch at a lack of long-term leases. They’ll ask about occupancy projections and seasonal ADRs instead.

Bonus Tip: If your lender says they don’t count Airbnb income until you have a 2-year history — move on.

🔗 Want to learn more about DSCR loans? Check out our guide to STR financing options.

2. “What’s the minimum DSCR you require — and how is it calculated?”

If you’re using a DSCR loan, this is critical. DSCR loans are based on the property’s ability to pay for itself — not your personal income. So understanding how a lender calculates that ratio will help you better evaluate your buying power.

DSCR = Monthly Gross Rental Income ÷ Monthly Debt Service

Many STR lenders want to see a DSCR of at least 1.2 to 1.25, meaning the property earns 20–25% more than the mortgage costs. But some flexible lenders will go as low as 1.0 or even under, with higher rates or larger reserves.

Pro Tips:

• Ask whether they use 12-month average gross rent, or annualized AirDNA/Hostaway projections.

• Confirm if they require appraisal-based income or if they’ll use your actual bookings from Airbnb.

A slight change in how income is calculated can affect your approval odds and your max loan amount.

3. “What reserves, documentation, and timeline should I expect?”

Surprises are great for birthdays. Not so much for closings.

Before moving forward, ask your lender to be specific about what’s required — and when — so you can plan accordingly.

Ask:

• How many months of reserves are required (some want 3, others want 12)?

• Will I need a property management contract in place before closing?

• Can I close in an LLC or does it have to be in my personal name?

• What’s the realistic timeline from application to close?

You don’t want to lose a great deal because your loan dragged on for 45+ days when you thought it would take 3 weeks. Worse yet, you don’t want to get all the way to underwriting only to find out they don’t lend to LLCs — and your whole asset protection strategy falls apart.

💡 Read our step-by-step loan prep checklist here.

4. “What are the total closing costs — and are there any prepayment penalties?”

Many STR investors focus too much on interest rate — and not enough on total cost.

Here’s what you might get charged:

• Origination fees (0.5%–2%)

• Processing and underwriting fees

• Appraisal and inspection fees

• Title, escrow, and doc prep

• Points to buy down your rate

• Prepayment penalties or lockout periods

Let’s say your DSCR loan has a 3-year prepay penalty — meaning if you refinance or sell within 3 years, you’ll owe 3% of the loan amount. On a $600K home, that’s $18,000 you’re handing back.

Tip: Always ask for a Loan Estimate (LE) early in the process. Then have your CPA or mentor look it over — especially if the loan includes adjustable-rate terms, interest-only periods, or balloon payments.

5. “Can I scale with you — or will I need a new lender after this deal?”

Your lender shouldn’t just be a one-time partner. If you’re planning to buy multiple properties in the next 12–24 months, ask what scaling looks like.

Important questions:

• Is there a loan limit per investor?

• Can I finance multiple properties at once?

• Do you offer portfolio loans for 3–5 doors under one umbrella?

• Do you work with STR investors in other states or markets?

Some lenders will max out after 4–5 properties, or they’ll require you to refinance everything if you want to bundle into a portfolio loan. It’s far easier to work with a lender who’s flexible and familiar with growth strategies.

Also ask: If I return with another deal in 6 months, will I go through underwriting all over again? Or do you keep my docs on file?

A Real-World Example (And Why This Matters)

Let’s say you find a great STR in Fernandina Beach for $500,000. It projects $85,000 in annual income based on AirDNA, with estimated expenses of $40,000.

You want to compare two lenders:

Lender A

• DSCR requirement: 1.25

• Uses appraisal-based rent at $5,500/month

• Offers 80% LTV

• No prepay penalty

Lender B

• DSCR requirement: 1.0

• Uses Hostfully projections at $7,000/month

• Offers 85% LTV

• 3-year prepay penalty

If you go with Lender B, you bring $25K less to closing, but you’re locked in for 3 years — which limits your refinance options. That may or may not be worth it depending on your hold plan.

Wrap-Up: STR Lending Is a Relationship, Not a Transaction

The best STR investors build a team of lenders who understand their goals, timeline, and market. You want someone who can move fast, work with STR income, and help you scale — not just offer the best teaser rate on paper.

Before you choose a lender, always ask:

1. Do you work with STR income (and how do you underwrite it)?

2. What are your DSCR requirements and calculation methods?

3. What reserves, docs, and timeline do you need?

4. What’s the full cost of this loan — including hidden fees or prepay penalties?

5. Can I scale with you?

And one final tip: Always get quotes from at least two lenders, even if one seems like a slam dunk.

Want Help Vetting Lenders or Modeling a Deal?

That’s exactly what we do at Deal Room.
We combine custom underwriting with real-world STR experience to help you find the best-fit financing — not just the cheapest loan.

👉 Book a free 15-minute lender matchmaking call here.

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