If you are looking to buy an Airbnb or short term rental property, your financing strategy can make or break your investment. Many real estate investors lean toward DSCR loans for their flexibility and speed to close. DSCR loans let you qualify based on a property’s income rather than your own, which makes them a great fit for growing portfolios.
But there is another option worth strong consideration—conventional loans. While often overlooked, conventional financing can offer better terms, lower costs, and similar flexibility when structured by the right lender.
That is why we are excited to spotlight Tomo, one of Rabbu’s lender partners, who offers investor friendly conventional loans designed specifically for STR buyers.
What Is a Conventional Loan for Short Term Rentals?
A conventional loan is a traditional mortgage backed by Fannie Mae or Freddie Mac. While typically used for primary residences or long-term rentals, they can also be used to finance vacation rentals and short-term rental investment properties as long as you meet specific guidelines.
Traditionally, conventional loans required a high level of personal income and didn’t consider rental income projections. But that’s changing.
Why Conventional Loans Work for STR Investors
Conventional loans have a reputation for being conservative and hard to qualify for as an investor, but that is quickly changing. Lenders like Tomo now allow projected short term rental income to be used as part of the loan qualification process. That means you can still benefit from your property’s revenue potential even before it has started generating income.
In many cases, conventional loans come with lower interest rates and lower down payment requirements compared to DSCR loans. That allows you to preserve capital, improve cash flow, and create more buying power as you grow your STR portfolio.
Tomo in particular offers:
- Conventional loan structures that consider projected STR income
- Lower rates than typical DSCR options
- Smaller down payments to reduce your upfront cost
- Investor focused underwriting and fast support
DSCR Still Has Its Place
DSCR loans remain a great tool in an investor’s toolbox. They are often faster to close, require less personal income documentation, and offer strong flexibility for buyers who are scaling quickly or purchasing unique property types.
Many of Rabbu’s lender partners offer DSCR financing and continue to serve STR investors extremely well. But if you are looking to optimize terms and reduce costs, especially on your first few properties, a conventional loan may be a smarter fit than expected.
The Bottom Line
Conventional loans are no longer just for primary residences or long term rentals. With partners like Tomo leading the way, they are now a powerful option for short term rental buyers who want better terms and full transparency. Whether you are buying your first vacation rental or expanding your Airbnb portfolio, it is worth exploring how a conventional loan could help you save and scale.
Learn more about Tomo and our other trusted lending partners at https://rabbu.com/airbnb-loans.
