How to Finance Your Airbnb With a Loan [6 Strategies]

Thinking about turning a property into a thriving Airbnb? There are several creative ways to finance your investment. 

From tapping home equity for a down payment to using a personal loan for furnishings, here are six practical ways to finance your Airbnb and get started.

Table of Contents

1. Why invest in an Airbnb?
2. 6 strategies to finance your Airbnb investment
   1. 1. Home equity loan
   2. 2. Home equity line of credit (HELOC)
   3. 3. Investment property loan
   4. 4. Business loan for Airbnb
   5. 5. Personal loan
   6. 6. Airbnb-specific financing options
3. How to buy an Airbnb property with no money down
4. Do you need an LLC for your Airbnb?
5. Choose the right Airbnb loan
6. FAQ

Why invest in an Airbnb?

Short-term rentals like Airbnb and VRBO are a hot commodity. Airbnb alone has over 5 million hosts and over 8 million active listings, according to its Q3 2024 Shareholder Letter. 

Compared to long-term rentals, Airbnbs can generate higher income, especially in areas with high travel demand. 

The flexibility is a big draw, too. Airbnb and similar platforms make it easy to manage bookings, payments, and even marketing. Plus, you have the freedom to adjust prices based on demand—think higher rates during peak travel seasons or local events. (We’re looking at you, Taylor Swift Eras Tour.)

But Airbnbs aren’t guaranteed moneymakers. In 2022 (the most recent data available), a typical U.S. Airbnb host earned $14,000 per year. Unless you’re an outlier or own multiple short-term rental properties, it may provide more supplemental income than a full-time living. 

6 strategies to finance your Airbnb investment

The best Airbnb loan for you will depend on how you answer questions, including:

• Do you already have rental income to show as proof of income for a loan?
• What’s your credit score?
• How much money do you need to borrow?
• Do you plan to use equity from a property you already own?

Here’s a breakdown of six financing options and who each might be best for.

Financing option	Best for
Home equity loan	Homeowners with equity who need a lump sum for buying or upgrading an Airbnb
Home equity line of credit	Homeowners with equity who want ongoing access to funds over time
Investment property loan	Buyers focused on rental properties they don’t plan to live in
Business loan from Airbnb	Entrepreneurs running multiple rentals or treating their Airbnb like a business
Personal loan	Borrowers with strong credit who need a smaller, unsecured loan
Airbnb-specific financing	Investors looking for programs built specifically for short-term rentals

1. Home equity loan

Do you already own a property with built-up equity? If so, you could use a home equity loan to finance your Airbnb. 

These loans give you a one-time cash infusion for anything you need. For example, you could use the money as a down payment on a new place or to renovate a space you already have (for instance, an unfinished basement or mother-in-law suite). 

Some of the best home equity loan lenders let you borrow up to 100% of your home’s equity (which is your home’s value minus your mortgage balance). Use our home equity loan calculator to see how much you could borrow. 

Best for: Homeowners with equity who want straightforward financing and prefer getting all the money upfront.

Tip

Use a comparison tool—LendingTree is our favorite—to save time while shopping for home equity loans. This platform allows you to compare rates and terms from multiple lenders at once.

2. Home equity line of credit (HELOC)

A home equity line of credit (HELOC) is another Airbnb loan option if you have equity to tap into. A HELOC is a line of credit secured by your home so you can withdraw money over time as needed. You pay interest only on what you borrow rather than your maximum approved credit limit.

The biggest downside of a HELOC is that most have variable interest rates, so your monthly payment can shrink and balloon over time. Similar to a home equity loan, you risk losing your property if you default on payments. 

Best for: Homeowners with equity who need access to funds over time, especially for ongoing projects like renovations or upgrades.

Tip

Interested in a HELOC? Let us introduce you to one of the best HELOC providers: Figure. It has loans with fixed rates and funding in as soon as five days. However, you’re required to withdraw 100% of your approved credit limit upfront.

Read More

Best HELOC Lenders & Rates 

3. Investment property loan

An investment property loan is specifically for financing second homes, including Airbnbs and other rental properties. These loans typically require a higher down payment (think 20% or more). 

Many investment property lenders will expect you to have at least six months of mortgage payments in savings because these loans are generally riskier. 

Best for: Buyers focused solely on purchasing properties they don’t plan to live in.

Tip

Consider the lender New American Funding (NAF). It specializes in investment property loans and can guide you through the process. NAF says you can lock in the best interest rates by putting at least 25% down and having a credit score of 740 or higher

4. Business loan for Airbnb

Another option is to use a business loan to purchase an Airbnb. But most lenders require at least one year in business, so this may be better if you’re an established entrepreneur. 

To qualify, you’ll need to show your business plan, projected income, and possibly your current revenue if you already own rentals. 

Unlike home equity-based options, business loans don’t require you to use your personal property as collateral. But you may still need strong credit and a solid financial history to get approved with the best business loan lenders.

Best for: Established entrepreneurs looking to create a scalable Airbnb portfolio.

Tip

LendingTree is an excellent way to compare small business loan options from multiple lenders. You can still explore business loans if you’re just starting, but be ready to explain how your Airbnb will generate income and how you’ll use the loan to make it profitable.

5. Personal loan

A personal loan might be a solid option if you need a smaller amount to get started. For example, if you’re renting out a spare bedroom, you could use the funds to furnish the space or make simple upgrades.

Personal loan limits might be as high as $100,000. While that may not cover a down payment on a new property, it can help with smaller costs like appliances, decor, and other startup expenses. 

Personal loans don’t usually require collateral. But as a trade-off, you’ll likely pay higher interest rates. (The current average personal loan rate in January 2025 is 12.46%, but some loans can go up to 35.99%.) 

Also, repayment terms are short (typically two to seven years), so you’ll need a plan to repay it faster than many other options.

Best for: People with strong credit who need quick cash for moderate expenses.

Tip

You can save time by using a marketplace—such as our top-rated personal loan marketplace, Credible—to shop with multiple lenders at once.

Read More

Best Personal Loans

6. Airbnb-specific financing options

If you’re serious about short-term rentals but don’t fit the mold for traditional financing, you could look into Airbnb-specific loans or loans specifically for short-term rentals. 

These programs often consider your projected Airbnb income when evaluating your eligibility, which can be the boost you need to get approved if you’re just starting out.

For example, platforms Host Financial and LoanGuys offer financing for short-term rental investors. Even if this is your first property, they can run projections through AirDNA to estimate your short-term rental income or use market rental rates. Still, even with this financing option, expect to supply a down payment. You’ll be hard-pressed to find Airbnb loans with no down payment.

Best for: Full-time Airbnb investors or new investors who don’t qualify for traditional financing options.

Tip

If you don’t have rental income yet, you can use Airbnb’s income calculator or AirDNA to help estimate potential earnings. Also, be sure to vet any Airbnb-specific lender you’re considering. Scams are out there, and it’s up to you to confirm whether a company is legitimate. When in doubt, trust your gut. 

The most common financial mistakes I have observed people make when financing an Airbnb with a loan include overestimating projected income, failing to account for tax obligations, lacking a thorough understanding of state, city, and county regulations, and neglecting to consult financial or legal professionals who can provide guidance in avoiding these pitfalls.

How to buy an Airbnb property with no money down

Buying an Airbnb with no money upfront will require you to get creative. Here are strategies you could look into:

• Use your equity or a personal loan. Unless you borrow against the equity you already have or use a personal loan, you will likely need a down payment to get an Airbnb.
• Seller financing. In some cases, you may be able to work out a deal with the seller where they finance the property themselves. You make payments directly to the seller instead of a bank, which may eliminate the need for a traditional down payment. 
• Partner up. Teaming up with a business partner can help you split the financial burden. For example, one partner might provide the upfront cash while the other handles operations.

⚠️ Warning: No-money-down strategies often come with higher risks or tighter terms. Always do the math to make sure your Airbnb income can comfortably cover the costs, including loan payments, maintenance, and unexpected expenses.

To manage risk when taking out a loan for Airbnb, I recommend starting by selecting the appropriate loan and loan amount, conducting a stress test to ensure affordability of additional mortgage payments, and setting aside a reserve covering at least three to six months of mortgage payments, maintenance, and utility expenses. 

Additionally, I would discuss alternative strategies in case the Airbnb model proves unviable, such as converting the property into a long-term rental or selling it. Lastly, I would advise clients to consult with a real estate attorney, CPA, and mortgage broker to build a strong professional team and enhance the success of their investment.

Do you need an LLC for your Airbnb?

Technically, you don’t need an LLC (limited liability company) to run an Airbnb. But it’s highly recommended, and many hosts choose to set one up for extra legal protection. 

An LLC separates your personal assets (think your home, car, savings, and retirement accounts) from your business. If someone files a lawsuit related to your rental, your personal finances are less likely to be at risk.

LLCs come with setup costs and ongoing administrative work. If you’re running just one property as a side hustle, you might feel like the extra effort isn’t worth it. But if your Airbnb is a core part of your investment strategy (or you have many assets to protect), look into it.

Tip

Check your state’s LLC requirements, and consider talking to an attorney or tax professional to determine whether it’s worth it for your Airbnb business.

Choose the right Airbnb loan

The right Airbnb loan for you will depend on the type of property you’re buying and your specific goals. 

• If you have home equity, a home equity loan or HELOC could be the simplest way to access funds.
• If you’re buying a dedicated rental, an investment property loan might be better.
• Treating your Airbnb like a business? A business loan might be a better fit. 
• If you need a quick, smaller loan, a personal loan or Airbnb-specific financing could do the trick.

Whatever option you choose, compare rates, fees, and repayment terms before committing. Make sure your Airbnb income can cover the costs so your loan doesn’t turn into a financial headache down the road.

Read More

HELOC vs. Personal Loan: Which Is Better?

FAQ

Can I Airbnb my house if I have a mortgage?

Yes, you can Airbnb your house if you have a mortgage, but reviewing your loan agreement and contacting your lender is essential. Many mortgages include clauses restricting short-term rentals or requiring the property to remain your primary residence. Failing to comply could lead to a breach of contract. 

Also, check with your homeowners’ association or local regulations to ensure short-term rentals are allowed in your area. Being transparent with your lender and following local laws will help you avoid complications.

How do I start an Airbnb business?

Starting an Airbnb business begins with choosing the right property and securing financing. Research high-demand locations, evaluate startup costs, and compare loan options. 

Next, ensure the property complies with local short-term rental laws and is equipped with amenities guests value, such as Wi-Fi and a well-furnished interior. Once the property is ready, create a listing on Airbnb with professional photos, a competitive price, and clear rules for guests. Consistent upkeep and responsive customer service are key to growing your business.

Is it profitable to own an Airbnb?

Owning an Airbnb can be profitable, particularly in areas with strong tourism or business travel demand. Short-term rentals often generate higher per-night rates compared to long-term leases, allowing hosts to earn more during peak seasons. 

However, profitability depends on occupancy rates, property maintenance costs, and platform fees. Effective marketing, competitive pricing, and positive guest reviews can increase bookings and maximize returns. Risks can include market saturation or regulatory changes, but a well-managed Airbnb in the right location can be a lucrative investment.

How do Airbnb loans compare to traditional mortgages?

Airbnb loans often differ from traditional mortgages in flexibility and interest rates. Traditional mortgages are designed for long-term residential use and usually require borrowers to occupy the home. 

In contrast, loans tailored for Airbnb properties may have fewer restrictions on short-term rentals but often come with higher interest rates to account for the perceived risk. Airbnb loans may offer options such as interest-only payments during construction or renovation. For hosts seeking tailored financing, business loans or HELOCs could align better with the unique demands of short-term rentals.