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Refinancing With Airbnb Income

I just discovered that Airbnb income cannot be used as qualifying income when applying for a refinance of a home. That is a huge problem for me since it has been my main source of income for five years. Has anybody gotten around this? I have heard that Quicken and a couple other similar companies allow it but I am reluctant to use them. Thanks for any input.

Get a different lender, you have been paying taxes on the income then it is on your tax returns for 5 years. Self employed people buy houses/refinance all the time. If you have not been paying taxes then go back and amend your tax returns.

RR

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Here is that rare thing, something useful from Airbnb site: https://blog.atairbnb.com/mortgage-refinancing/
Fannie Mae accepts Airbnb income for refinancing of a primary residence. All corroborating documentation I found was dated 2018 when the guidance was first issued – no idea of the status/functionality currently.
I also found an article about a clarification from Fannie Mae that STR use does not violate requirements for their second home mortgages.
https://nicolaszennaro.com/real-estate/fannie-mae-issues-ruling-on-renting-newly-purchased-second-homes-on-airbnb/

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I read that as well. In 2018 Fannie Mae agreed to work with those three lenders to accept the airbnb income to qualify, only on a principal home, which mine is. I don’t want to leave my current lender. My question is has someone either managed to have their airbnb income qualify with a different lender or what their experience had been with either Quicken or better.com. I have declared and paid taxes on this income from day one.

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The airbnb income is treated differently by Fannie Mae as a matter of policy and is not on their list of qualifying income. The 2018 deal was a pilot program with the big three web-exclusive brokers. It is not a deficiency of my particular lender. I have been self- employed since 1985 so I do understand self-employment and how it relates to both my tax-reporting and home financing. However I never considered that any kind of reported income would not qualify.

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The problem is that the other lenders not in the Fannie Mae pilot program will want their underwriting to qualify loans to be sold on the secondary market. Good luck with your search for a lender. Have you tried local mortgage companies (rather than the name-brand banks)?

I refinanced earlier this year and the agent I worked with told me not to show the Airbnb income anywhere because banks consider it to be unreliable income. Fortunately for me, I switched all my Air deposits to PayPal last year so it did not show up on my bank statements. It was on my tax return so I’m not sure how they missed it. But this is the second time I’ve had it rejected for income purposes. It’s a very insignificant portion of my income so I was not reliant on it. Good luck.

I have only tried local companies. But any Fannie Mae loan apart from ones with those web companies I fear are going to give me the same result.

That is just insane, if you have years of tax returns showing income then that is the definition of reliable imo. I am refinancing my house right now and I provided tax returns and that income is part of my income. I am fortunate that it would not matter if they excluded it because my other self employment income, plus my spouses regular W-2 income is more than enough to qualify.

That being said it has not come up.

RR

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This is funny (sad funny not ha ha funny) to read during a pandemic. There are optometrists, airline employees, and restaurant CEOs, in my personal circle who have had unreliable income since March.

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Most self employment income is unreliable, yet the banks average it out and make loans. I have not had a job since 1992 yet I have no issue accessing credit.

This goes to the low bar for entry for AirBnb, anybody can be a host and the banks do not trust it. That being said, the more years a host makes money and pays taxes the less risk for the banks it would seem.

RR

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@RiverRock One would think they would be happy to use it if we’ve been doing it for a while! Mine has been a very consistent amount for 5 years. It may vary a couple hundred but it’s at 5 figures. The loan officer was adamant that I not list it as a source of income. I’ve been retired for 7 years and do not need to rely on Air but it’s nice to have the extra cushion with the current state the world is in right now.

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Try a credit union. Find a family member that belongs to one so that you can join. I belong to one and it’s so much better than a bank. Both my kids got accounts as family members.

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Have used Quicken many times and do not understand your reluctance to use them. Their service has been excellent.

Welcome to the forum @Jeflani

I also used quicken for a refi about 20 years ago with no issues.

RR

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Good to know. Anyway it all worked out because my kids are on my loan as well and my income is not even necessary.

Hi everyone, I’ve been a lender for over 20 years. The issue is that Fannie Mae considers rental income on a single family, owner occupied, primary residence “boarder income”. And the Fannie Mae HomeReady program is the only program that allows boarder income to be used for qualifying. If you claim the income on schedule C rather than schedule E then you might be able to get away with it. But you’ll need to have a two year history and the income will need to be averaged over that two year period. Also under the current COVID guidelines you’ll need to show proof of receipt of year to date income and you’ll also need to show recent income from the business. This is true for all self employed borrowers right now.

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Also the only way a local bank or credit union won’t have to follow the same guidelines is if they have portfolio programs and they don’t sell to Fannie Mae or Freddie Mac. Unless they have deep pockets (which most small local banks don’t have), they would need to sell the loans on the secondary market in order to free up cash to make loans to new borrowers.

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@Lisannem, thanks for chiming in with expert, up to date information. And welcome to the forum.

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Thanks for contributing.

Worth pointing out this is US only advice, as this is an international forum.

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