STR Mortgage and banking question

[John Moisa]

With regard to short term rental mortgages how does the lender look at the borrowers Debt to Income? I know with long term rentals you can show the leases and that will offset the DTI. But with STRs how do they look at the borrowers debt to income?

[Joseph Bafia]

If you are looking at buying it as a 2nd home/vacation home then you're likely looking at DTI. What we've run into is that STR income not treated like LTR with a lease. The revenue is only count once it hits your Schedule E tax return, so you're riding the expenses until you file taxes.

However, if you use an asset based lender (we have on one deal) they don't look at it through DTI. They evaluate it as a "business" and treat is differently.

Many ways to make it happen!