Arizona is one of the few states where the legislature has told cities they cannot ban short-term rentals outright. That has made Scottsdale, Sedona and other towns into large vacation rental markets, with permit rules layered on top.
In short: You can finance an Arizona Airbnb or VRBO property with a DSCR loan from LendingStreet, and on some programs the property qualifies on projected short-term rental income instead of a long-term lease. Loans start at $150,000 with no stated maximum, the minimum credit score is 620 and there are no W-2s or tax returns. State law limits outright bans, but most cities now require a permit, and every operator needs a transaction privilege tax license.
Scottsdale and the Phoenix metro are the largest market, driven by winter visitors, golf, spring training baseball and big events. Pool homes in Scottsdale, Paradise Valley, Tempe and Mesa book well from January through April and much less in the summer heat.
Sedona draws visitors year round for its red rock trails. Flagstaff runs the opposite calendar from Phoenix, with summer heat-escape travel and a winter ski and snow season, plus Grand Canyon traffic. Tucson, Lake Havasu City, Prescott and Page add their own mix of winter visitors, boaters and national park traffic.
| Market | Who books | What to check |
|---|---|---|
| Scottsdale and Phoenix metro | Winter visitors, golf, spring training | City STR permit, HOA rules, pool safety |
| Sedona | Year-round hikers and couples | City permit, neighbor notice, parking |
| Flagstaff | Summer and ski-season travelers | Permit, snow access, wildfire coverage |
| Lake Havasu City | Boaters and spring breakers | Occupancy limits, noise rules |
A 2016 state law bars Arizona cities and towns from prohibiting short-term rentals. A 2022 update let them require a local permit or license, an emergency contact, neighbor notification and proof of a state tax license, and to suspend permits after repeated violations. Scottsdale, Sedona, Phoenix, Flagstaff and many other cities now run permit programs.
HOAs are a different story. State law does not stop a homeowners association from restricting rentals under its covenants, and many planned communities in the Phoenix area set minimum lease terms. Check the CC&Rs as carefully as the city rules.
The ratio is simple: monthly income divided by the monthly payment, where the payment includes principal, interest, taxes, insurance and HOA dues. What changes on a short-term rental is the income figure. Some programs accept a projection of nightly-rental revenue from a third-party data provider; others lean on 12 months of booking history.
A ratio of 1.0x or better meets the standard minimum, and some programs go below it. Leverage tops out at 80% LTV on a purchase and 75% on a cash-out refinance, but short-term rental programs and bigger balances can be lower, so it varies by program. No W-2s, a 620 minimum score, LLC borrowers welcome and terms up to 30 years. The program covers one to eight units, which includes duplexes and small cottage groups; nine units or more is handled as commercial.
Arizona taxes short-term lodging through its transaction privilege tax, administered by the Department of Revenue, plus county and city lodging taxes. Platforms collect many of these, but operators still need their own TPT license, and cities now ask to see it before issuing a permit.
Arizona property taxes are moderate, but a rental does not get the primary residence classification and its owner-occupant credit, so the bill after an investor buys can be higher than the seller's. Use the rental figure from the county assessor.
Insurance has to be written for short-term rental use. Pool homes add liability exposure, and properties in Flagstaff, Prescott and Payson can face wildfire underwriting. Monsoon storms bring wind and water claims across the state, so ask about the deductible as well as the premium.
This example is illustrative and not a quote. An investor buys a three-bedroom pool home in south Scottsdale for $725,000. A third-party projection for comparable homes shows $68,000 a year in gross revenue. At 75% LTV the loan is $543,750, and estimated principal and interest on a 30-year term is about $3,802 a month. Add $290 in taxes, $310 in insurance and $85 in HOA dues, and the payment is about $4,487. $5,667 of average monthly revenue divided by that payment gives a DSCR of about 1.26x.
If the projection came in lower, the investor could borrow less. At 70% LTV the loan is $507,500, the payment about $4,234 and the DSCR about 1.34x, with $36,250 more brought to closing. The ratio here leans on a strong winter. If the projection were based only on summer months, it would fall well short, which is why a full 12-month projection built on true comparables matters.
| Item | Amount |
|---|---|
| Purchase price | $725,000 |
| Loan amount at 75% LTV | $543,750 |
| Down payment | $181,250 |
| Projected annual revenue | $68,000 |
| Average monthly revenue | $5,667 |
| Estimated principal and interest (30-year) | $3,802 |
| Property taxes | $290 |
| Insurance | $310 |
| HOA dues | $85 |
| Total monthly payment | $4,487 |
| DSCR | About 1.26x |
The desert and the high country peak at opposite times. Phoenix, Scottsdale and Tucson earn most of their revenue from January through April and slow sharply from June through September. Flagstaff and the White Mountains do the reverse, with summer as the main season and snow-driven winter weekends. Sedona is the steadiest. An investor with both types can even out cash flow across a portfolio.
A complete file moves faster. Gather these before you apply:
Our investor loans are business-purpose loans on non-owner-occupied property. Share the address, the price, a revenue projection and how much leverage you want. We run the ratio on realistic taxes and insurance and come back with a few structures, plus a refinance path once the property has a booking history of its own.
We lend across Maricopa, Pima, Coconino, Yavapai and Mohave counties. Reach us at (877) 298-1001, or get a quote through the form below.
Not outright. State law prevents cities and towns from prohibiting them, but cities can require permits, emergency contacts and tax licenses, and can suspend permits after violations.
It can, if the covenants allow it. State law limits cities, not associations, so review the CC&Rs before you buy.
Yes. Short-term rental operators need an Arizona transaction privilege tax license, and many cities require it before issuing a permit.
The ratio uses average monthly revenue over the full year, so a strong winter has to carry the slower summer months.
Not on every program. Some qualify a short-term rental on projected nightly revenue or on its booking history instead of a 12-month lease.
Yes. Once you have booking history, a rate-and-term or cash-out refinance can use actual revenue. Our STR refinance guide, linked below, covers how that works.
No. Our investor loans are business-purpose loans on non-owner-occupied property only, so primary and second homes are out.
Timing depends mostly on the appraisal, title and insurance. A complete file with the revenue projection, permit confirmation and insurance quote in hand moves fastest.
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