Will banks provide home loan if you are planning to short term rent your property through Airbnb?

Banks assess rental income differently for new investment property purchase vs refinance. New investment property purchase If it's a new investment property purchase, obviously you wouldn't have the rental income history to go with your application. Only in this case, banks accept rental appraisal from the registered real estate agent for assessment purposes, and lenders generally take 80% of the appraisal amount to allow buffer to pay for managing agent’s fees, council rates, strata levies, repairs and to cover for any vacancies. You may be able to get a higher rental yield from Airbnb. But unfortunately lenders are very conservative and they would not use your Airbnb rental estimate even if it’s higher than the normal rental income. As you may guess already, it is very difficult to prove that your short term Airbnb income will be consistent and ongoing for all seasons. Hence, for a new purchase, banks have no issue providing a home loan based on your regular rental return given that you have sufficient income to repay your home loan. Refinance existing investment loan If it’s a refinance of your existing investment property that you have been operating as Airbnb is a different story. Not all lenders will accept Airbnb income, and due to the coronavirus pandemic. some banks have tightened their lending policies around Airbnb income. Airbnb properties are facing a higher level of scrutiny by the lenders than standard investment properties due to their short-term rentals in nature. For lenders that accept Airbnb income, generally they take 70% of the gross rental income based on high vacancy rates and maintenance costs. Properties in the tourist destination, or ski resorts subject to seasonal rent are discounted even further. You’ll need to be able to provide the most recent tax return showing income and expenses for your Airbnb property. In general, lenders require two years’ tax returns to show income consistency. In summary, it is not mission impossible to get a home loan for an Airbnb property, the key to maximising your borrowing power with Airbnb income is to apply with the right lender. Most mortgage brokers have experience and would know lenders on their panel accept rental income from Airbnb as well as shared spaces or rooms, often they can save you a lot of time running around.