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I’m trying refinance our primary residence where we rent out a room w/ a living room(1st floor) on airbnb. We report the income on Schedule E.
We are in the application process w/ a big bank, and as expected they will not count the airbnb income for qualifying us. We have enough income from other sources to qualify in terms of debt to income ratio. However, since the underwriter has seen our bank statements and sees all of these Airbnb deposits, they want to see the link to our Airbnb listing. I also co-host and receive money into the same account for other people’s listings.
I’m concerned that if they see we are renting a room (1st floor) out from our primary residence on Airbnb, they might reclassify it as a commercial loan or give a higher interest rate since the loan may no longer look like A paper in case they sell the loan later.
Has anyone had any problems refinancing their primary residence when they are just renting one room out on Airbnb? Searching the Internet seems to indicate that any Airbnb activity even if just a room will make the loan no longer have a primary residence classification, but that was in 2016.
Just wondering if anyone has had any real world experience.
Going on the assumption that you live in the U.S., your house is still your primary residence. Therefore, you are eligible for the lower interest rate, mortgage interest deduction, etc.
The reason that mortgage interest is higher for commercial properties, including rental properties, is that borrowers are more likely to walk away from the mortgage on an income property than to walk away from the mortgage on their primary residence.
Thanks. I was hoping someone had some recent experience, as airbnb is more common versus a few years ago. The big bank is giving me a .5% discount on the rate due to existing checking account relationship, so I’m hoping to stay w/ them. Seems better to delist and stop doing airbnb for awhile. Crazy, how they won’t count $30K in gross income.
I think it’s prudent on lenders’ parts to not count Airbnb income. As many localities are regulating Airbnb the income might drop or disappear. If the borrower couldn’t pay the mortgage without the Airbnb income the loan would be too risky.
I have a whole house rented as airbnb rental, no lender will take airbnb income as income. They only loan your money based on regular lease. I just had refi done for 2 of my rentals.
When I refinanced, mortgage was due last year, I didn’t mention Airnb, it was my bank, so they could see the deposits, but they didn’t ask, and I was approved.
We have not had an issue refi-ing any of our properties, that all show Air BNB income. Our current bank (US Bank) will even count the income since we have more than two years of income history from Air BNB.
Where are you located? We are in Oregon, been here 16 years. It took us 18 months to get any type of loan (your situation sounds very similar to ours). We finally got a loan from the bank we’ve been with all along. All I can say is be very careful and read the fine print, we ended up with a s**tty loan at double the interest. We are considered commercial but even so, our terms changed dramatically. Needless to say I will be visiting the bank again and complaining very loudly! For the time being we are going with it as it was the only way to get any type of loan at all!
Not the original question, but for refinancing an income airbnb property check out Visio Lending. Yes, higher rates, but they do short term rentals, which most won’t touch
They also don’t see it as “regular,” because it can be up and down. It’s my understanding that they want to see something regular like pay stubs or failing that, a profit and loss statement. They will also ask for a lease agreement and cancelled renter’s checks.
As a self employed person I’ve always had to show P&Ls for my professional services as well as tax returns.
