A five-to-eight unit building earning nightly revenue fails two lender screens at once: it is too big for residential DSCR and its income type is one many commercial lenders will not underwrite. It is financeable — through the sources whose programs are built for it.
In short: Five to eight unit properties with short-term rental income are financed either on a DSCR basis using gross rental revenue, or as commercial multifamily using normalized net operating income after management, maintenance, vacancy and reserves. The two methods can produce very different loan amounts on the same building, so the first question to answer is which one the capital source will use. DSCR programs start at a 620 credit score and $150,000, up to 80% LTV on a purchase and 75% on a cash-out, with leverage on nightly-revenue files often set lower.
At five units a property leaves residential lending and becomes commercial multifamily. That narrows the field and usually changes the math from gross rent to net operating income. Add short-term rental income and it narrows again, because many commercial multifamily lenders will not underwrite nightly revenue at all. A decline on this file usually reflects one lender’s credit box, not the building.
DSCR on gross revenue. Some sources extend DSCR-style products above four units. They divide gross monthly revenue — annual leases plus short-term revenue — by the full monthly payment, the same way they would a single-family short-term rental. This approach usually produces the higher loan amount.
Commercial underwriting on NOI. Others treat the building as commercial multifamily. They want operating history (often twelve months), a normalized expense load including management and reserves, and a larger equity position. The ratio is calculated on net operating income, which is lower than gross revenue.
No operating history. A minority of sources will underwrite projected revenue from comparable listings or market data, typically with a haircut to the projection and at reduced leverage.
Six-unit building, mixed tenancy.
| Four annual-lease units at $1,250 | $5,000 |
| Two nightly units averaging $2,400 | $4,800 |
| Gross monthly revenue | $9,800 |
| Monthly payment incl. taxes, insurance, reserves (assumed) | $6,900 |
| Gross-revenue DSCR | ≈ 1.42 |
| Commercial NOI basis (after management, maintenance, vacancy, reserves) | ≈ 1.15 |
Both figures are defensible. Which one the lender uses determines the loan amount — and that is the single question worth answering before you go under contract.
Yes, through capital sources that write it. Some extend DSCR-style products above four units and underwrite gross short-term revenue; others treat five or more units as commercial multifamily and underwrite normalized net operating income.
It depends on the source. Commercial-style underwriting usually wants about twelve months of operating history. Where there is no history, a minority of sources will underwrite projected revenue from comparable listings, typically with a haircut and at reduced leverage.
DSCR programs go up to 80% LTV on a purchase and 75% on a cash-out refinance. Five-plus unit short-term rental files often land below those maximums, because the capital source adjusts leverage for the revenue type and operating history.
DSCR programs start at a 620 credit score and a $150,000 loan, with no maximum loan amount.
Yes. Mixed tenancy is common in this size range. The lender will want the leases for the annual units and revenue records or projections for the nightly units, and how it weights each one drives the loan amount.
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