Short-Term Rental DSCR Loans for Foreign Nationals

Short-term rentals (STRs) such as Airbnb, VRBO, or fully furnished nightly rentals are an increasingly popular strategy for foreign nationals investing in U.S. real estate. In tourist destinations like Florida, these offer strong cash flow potential.

But while the appeal is clear, financing short-term rentals has been anything but simple for international buyers. Traditional lenders often exclude STRs from their underwriting, require U.S. credit or residency, or insist on in-person branch visits. That leaves many investors assuming the only way forward is an all-cash purchase.

Debt-service-coverage-ratio (DSCR) loans change that. By qualifying based on projected rental income,  not personal credit or income, they open the door for foreign nationals to finance vacation rentals without the usual roadblocks.

Key takeaways

• Short-term rentals offer higher cash flow potential than annual leases with long-term rentals.
  
  
• DSCR loans unlock financing by qualifying based on projected rental income rather than U.S. credit or income.
  
  
• Waltz supports STR financing for foreign nationals with DSCR loans, LLC setup, and remote closings,  all in one digital process.

Why short-term rentals are appealing for foreign investors

Short-term rentals (STRs), fully furnished homes or condos rented on a nightly or weekly basis through platforms like Airbnb or VRBO, have become a go-to strategy for many international buyers.

For foreign nationals, STRs combine strong financial upside with lifestyle flexibility. Florida’s beaches, Arizona’s desert getaways, and the Smoky Mountains in Tennessee and North Carolina are just a few examples of STR-friendly markets attracting foreign investors. With rising demand from both leisure and business travelers, STRs provide a way to generate income while still having a place to stay when visiting the U.S.

Benefits of short-term rentals

Short-term rentals (STRs) can require more oversight than traditional long-term leases, but for many foreign investors, the rewards far outweigh the effort. Beyond higher income potential, they offer financial, lifestyle, and even tax-related advantages.

• Higher income potential: Nightly rates in STRs are typically higher than pro-rated monthly rents, especially in vacation and business-travel markets. A well-located property booked most of the year can significantly outperform a comparable long-term rental.
  
  
• Resilient demand in desirable destinations: Properties in high-demand travel markets attract a steady flow of guests and often maintain stronger resale value over time.
  
  
• Dynamic pricing flexibility: Unlike fixed leases, STRs let you adjust rates in real time to capture demand spikes during peak seasons, weekends, or major events, while lowering them during slower periods to keep occupancy steady.
  
  
• Potential U.S. tax advantages: Depending on how the property is structured and local regulations, foreign investors may be able to deduct expenses like property management, maintenance, mortgage interest, furnishings, and depreciation. Always consult with a tax professional for guidance on individual situations.
  
  
• Exit strategy flexibility: Short-term rentals not only attract both investors and lifestyle buyers (such as families seeking vacation homes), but they can also be converted into long-term rentals if market conditions shift. This dual appeal gives owners multiple paths whether selling, repositioning the property, or holding it for stable rental income.

Challenges of short-term rentals

While the upside is attractive, short-term rentals come with added complexity. For foreign investors, these challenges can feel even steeper without the right support team in place.

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• Seasonality and occupancy swings: Vacation markets often see strong summer or winter peaks,  but slower off-seasons. Planning for uneven cash flow is critical.
  
  
• Local regulations and HOA rules: Some cities and homeowner associations restrict or cap STRs. Zoning changes, permit requirements, or HOA bylaws can limit where and how you operate.
  
  
• Higher management and turnover costs: STRs require frequent cleaning, guest check-ins, and maintenance. Without a local property manager, the logistics can be overwhelming from abroad.
  
  
• Marketing and booking demands: Unlike long-term rentals, STRs need constant visibility. Listing management, guest messaging, and reputation building take time and effort.

• Need for accurate financial projections to secure financing: Lenders and appraisers want to see realistic income estimates. Without reliable data (like AirDNA projections), underwriting can stall.

How DSCR loans work for short-term rentals

Traditional lenders rarely finance short-term rentals for foreign investors, but DSCR loans make it possible by focusing on the property’s income instead of the borrower’s personal profile. The DSCR calculation is straightforward:

DSCR = Operating Income ÷ Total Monthly Debt Service
(Where debt service includes principal, interest, taxes, insurance, and HOA fees if applicable.)

To qualify, the property must typically show a DSCR of greater than 1.0, meaning projected rent covers at least 100% of monthly expenses.

How STR underwriting works

Unlike long-term rentals, where banks look at existing leases, STR underwriting relies on projected rental income. Appraisers and lenders use tools like AirDNA data and the income approach to estimate what the property can reasonably earn on platforms like Airbnb or VRBO.

For foreign investors, this approach is essential. It means you don’t need U.S. credit, tax returns, or income verification, only a property with strong rental projections and proper documentation.

Steps for foreign investors pursuing STR loans

If you’re considering financing a short-term rental in the U.S., here’s a simple roadmap to follow:

1. Choose STR-friendly markets and confirm regulations
   Before you buy, check local zoning rules, licensing requirements, and HOA bylaws to ensure short-term rentals are allowed.
   
   
2. Run income projections
   Use tools like AirDNA or comparable listings to estimate nightly rates, occupancy, and annual rental income. This data will also support your loan application.
   
   
3. Prepare basic documentation
   At minimum, you’ll need a valid passport and bank statements from your home-country accounts showing proof of funds for the down payment.
   
   
4. Work with Waltz for setup
   Waltz’s Investor Kit handles your LLC, EIN, and more, making the lending process smoother and compliant.
   
   
5. Close remotely and start booking guests
   With remote notarization and digital closing, you can finalize your STR purchase without traveling to the U.S.

STR-friendly DSCR loans for foreign nationals

Short-term rentals combine lifestyle flexibility with strong income potential, which explains why they’ve become a top choice for foreign investors in U.S. real estate. The challenge has always been financing: traditional lenders either exclude STRs or impose requirements that most international buyers can’t meet.

DSCR loans change that, and Waltz makes them accessible. By qualifying based on projected rental income and bundling LLC formation, EIN setup, and more into one digital process, Waltz removes the friction that typically slows down foreign investors. Finance fast and close remotely so you can start hosting guests sooner.

Ready to finance your short-term rental in the U.S.? Get started with Waltz

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