Purchasing an Airbnb property can be a great investment, allowing you to earn income through short-term rentals. However, coming up with a down payment on a mortgage can be challenging. The good news is that there are options for financing an Airbnb property with no down payment. In this article, we’ll explore strategies investors can use to buy an Airbnb with 100% financing.
What Are Airbnb Loans?
An Airbnb loan refers to any type of financing used by real estate investors to purchase a property for short-term rental purposes. There is no single loan product designed specifically for Airbnbs. Rather investors can utilize various conventional and government-backed mortgage programs to finance their vacation rental property.
Common types of Airbnb loans include
- Conventional loans – Require at least 15-20% downpayment.
- FHA loans – Allow downpayments as low as 3.5%.
- VA loans – Offer 0% downpayment options for qualifying veterans.
- USDA loans – Provide 0% down mortgages in designated rural areas.
While possible, it can be challenging for investors with limited funds to qualify for a conventional loan. Government programs like FHA, VA, and USDA expand homebuyer access by reducing or eliminating downpayment requirements.
Strategies for 0% Down Airbnb Loans
If you want to purchase an Airbnb rental but don’t have funds for a downpayment, consider these tips:
Use Seller Credits
On a conventional loan, if the seller is willing, you can ask them to pay your closing costs and downpayment. This allows you to assume the mortgage with no money down. The seller credits these costs at closing, so you get into the home for free.
Look Into Downpayment Assistance Programs
Many state and local governments offer downpayment assistance grants and loans. These programs provide funds ranging from a few thousand to 20% of the home price. Eligibility is based on income limits.
Ask Lenders About “Piggyback” Loans
Also called 80-10-10 loans, these combine a first mortgage covering 80% of the value with a second mortgage for 10%. The remaining 10% comes from your funds. This allows you to buy with just 10% down.
Buy a Multi-Unit Property
On 3-4 unit properties, FHA, VA, and USDA loans may be available with zero downpayment. Live in one unit and rent the others to cover your mortgage.
Consider “Sweat Equity”
Some government loans allow sweat equity to substitute for a cash downpayment. This involves you putting in labor to fix up the property before or after closing. The value of those repairs counts toward your equity stake.
Look For Downpayment Grants
Check out non-profit organizations like Habitat for Humanity and state housing agencies. Many offer grants to cover downpayments and closing costs. Income limits apply, but some programs are open to all buyers.
Explore Seller-Funded Downpayment Loans
In some cases, sellers partner with lenders to provide a second mortgage covering the downpayment. You repay this loan monthly, but it allows 0% down.
Qualifying for an Airbnb Loan With No Down Payment
While 100% financing deals exist, you still must meet the lender’s income, credit score, and debt-to-income requirements. Here are tips to improve your chances:
- Pay down existing debts to reduce your DTI ratio
- Maintain timely payments on all current obligations
- Check your credit report and dispute any errors
- Limit new credit applications before applying
- Show steady employment and income history
Making a larger downpayment lowers risk for lenders. With no downpayment, you’ll need to demonstrate your ability and willingness to repay the mortgage. A clean credit history, low DTI, and stable income are key.
Using Rental Income to Qualify for an Airbnb Loan
Lenders allow you to count a portion of expected rental income when qualifying for an investment property loan. For Airbnb properties, follow these guidelines:
- Provide tax returns showing 1 year of short-term rental income history
- Use a conservative occupancy estimate (e.g. 60%)
- Deduct 25% for vacancies and maintenance
- Limit projected income to 75% of actual gross rents
Document projected earnings with data from Airbnb, VRBO, or other listing sites. Take a conservative approach, as lenders view vacation rentals as higher risk.
Pros and Cons of 0% Down Airbnb Loans
Pros
- Gain access to real estate investing without large savings
- Preserve capital for renovations, furnishings, marketing
- Potentially higher returns since you’re not tying up a downpayment
Cons
- Higher interest rates and mortgage insurance costs
- Need excellent credit and DTI to qualify
- Less equity stake in the property
- Higher payments with no downpayment cushion
While attractive for getting started, the higher costs and risks of 0% down loans make them best for borrowers with proven financial discipline.
Alternatives to Traditional Financing
If you don’t qualify for a no-down-payment mortgage, consider these alternative financing options:
- Hard money loans – Asset-based lending with easier approvals, but higher rates and fees.
- Private money loans – Borrow from individuals rather than institutions.
- Crowdfunding – Pool money from multiple small investors.
- Home equity loan – Leverage existing home equity.
- Business financing – Unsecured lines of credit, term loans, or factoring.
These tend to come with less stringent eligibility requirements but higher costs. Compare all your options before committing.
The Bottom Line
While challenging, it’s possible to buy an Airbnb property with no down payment through seller credits, grant programs, or government-backed mortgages. Just be sure to shop around for the best rates and fees. With proper planning and budgeting, you can launch your vacation rental business even without 20% down.
Fuel your investment strategy with our dedicated Airbnb Financing program. With loan limits up to $3 million and a painless, streamlined process, we make investing in short-term rentals easy.
The Airbnb market presents a lucrative opportunity for investors. The number of short-term rentals has increased by 105% in the last three years, and in some cities, investors are making almost $7,000 per month on just one property.
The only catch? Qualifying for a traditional mortgage on these ventures can be difficult. Without a lease in place or proof of the property’s annualized income, most lenders won’t finance a rental — leaving investors like you scrambling for funds.
Luckily, we’re not like other lenders. We know how to assess the viability of a short-term rental property, and we offer dedicated financing for just such investments. We make commercial lending easy, letting you find the true potential of Airbnb and short-term rentals.
AIRBNB FINANCING MADE SIMPLE
Unlike other lenders, we don’t make you jump through tons of hoops to secure your loan. We make the process simple, streamlined, and painless. We also require no personal income, no investor experience, and no lease agreements. We keep the paperwork to a minimum and the efficiency at full-speed as we process your loan.
The details:
● Property types allowed: Single Family Residence, Condo, Townhome, Duplex – 2 units, Triplex – 3 unit, Quadplex – 4 units, Cabin
● Locations available: All states except ND, NV, SD
● Loan term options: 5/1 ARM, 7/1 ARM, 30 Year Fixed and 10 Year Interest Only
● Loan sizes: $200,000 to $3,000,000
How To Finance Your First AirBNB Property
FAQ
How much down payment do you need for an Airbnb?
What is the 90 day rule on Airbnb?
Can you put a down payment on an Airbnb?
The new mortgage is more than the amount you owe, giving you cash to put down on an investment property. Another option for funding the down payment on an Airbnb is a home equity loan. With a home equity loan, you get a lump sum of cash and make monthly payments until it’s paid in full. A home equity loan is secured by your home.
How much down payment is required for Airbnb investment loans?
For loans on Airbnb properties through our lender partners, the typical down payment requirement is just 15%. This competitive rate makes it easier for investors to enter the short-term rental market. Is a personal guarantee required for these Airbnb investment loans?
Can you get a loan for an Airbnb rental property?
There isn’t such a thing as a loan specifically for Airbnb use, but there are plenty of financing options made with rental property investors in mind. Keep in mind when trying to secure financing for an Airbnb rental property that mortgages for investment properties work differently than a loan for your primary residence might.
How to finance an Airbnb?
Doing your homework is the most crucial step to buying a rental property. If you’re worried about how to finance an Airbnb, you can rest easy knowing that there are many loan options available. Even potential owners with lower credit scores or a small deposit can get a perfect loan to suit their needs with a little bit of patience.