Can You Get a Mortgage on a Short-Term Rental?

Written By Jeff Dinsmore

Try walking into your bank and saying you want a mortgage on an Airbnb.

They’ll smile politely. Nod. Then hit you with a hard no. “It’s too risky” “We don’t do AirBnBs” “Sorry, NO”.

Why? Because banks hate anything unpredictable. And short-term rentals are nothing but unpredictable. Vacancies jump around. Income isn’t steady. And regulators? They can flip the rules overnight.

So for years, short-term rental investors were left in the dark. Your choices were:

  • Pretend your Airbnb was a long-term rental, or

  • Buy in cash and hope for the best.

Neither was a great strategy.

Finally: A Mortgage That Actually Fits

Here’s the good news: there’s finally a lender that doesn’t treat short-term rentals like a dirty word.

They’ve built a program designed for properties rented less than 30 days at a time. Cottages. Vacation homes. Fourplexes that crush it on weekends.

And they underwrite it as exactly what it is: a short-term rental. Not a “pretend” long-term lease.

That’s a game-changer.

How It Works in Real Life

Let’s strip out the jargon and put it plainly.

  • You can borrow up to 75% of the property’s value.

  • Terms go up to 30 years.

  • You need a minimum 640 credit score.

  • And yes, you need a real appraisal - no guessing on value here, the things that the lender can get nailed down and be sure about it, they will.

Income is the kicker. Instead of forcing you to show a fake long-term rent, they’ll actually use your Airbnb income.

  • If you’ve got two years of tax returns (T1 Generals with Statement of Real Estate Rentals + Notice of Assesments), they’ll average those.

  • If your most recent year dipped, they haircut it (80% of last year’s numbers).

  • No history? They’ll look at economic rent for the area.

There are limits: you can’t go wild and buy 50 Airbnbs. The cap is 10 properties total, and only 5 mortgages with this lender and others combined.

Oh, and if you’re thinking timeshares, rooming houses (i.e.: rooms individually rented), or rentals with commercial space (like a coffee shop and rental on top)? This is not for you - This is for straight-up residential units only, up to 4 doors.

Who Wins With This

  • The Airbnb host who’s tired of bank managers raising their eyebrows.

  • The family buying a cottage they’ll rent on weekends.

  • The investor who knows a hot market but couldn’t get financing before.

Basically, if your plan includes renters who stay for nights instead of years, this program is finally your way in.

The Fine Print (Because There’s Always Some)

This isn’t a free-for-all.

You’ll still need:

  • A 20% down payment minimum - no default insurance allowed (CMHC/Sagen/Canada Guaranty won’t do it so it can’t be insured).

  • A lawyer who confirms local bylaws permit Short Term Rental use. (Yes, they check.)

  • To keep your debt ratios in check: 40% GDS, 45% TDS.

In other words, it’s flexible but not reckless.

The Bottom Line

Airbnb isn’t a fad. VRBO isn’t going away. And now, finally, Canadian financing has caught up.

If you’ve been told “no” because your property doesn’t fit the long-term rental box, this program is your door swinging wide open.

At VeloMortgage, we’ve got access to this lender’s short-term rental program. If you’ve been waiting for a mortgage that actually works for STRs, let’s talk.

Jeff Dinsmore
Mortgage Broker
FSRA # 10315
TMG - The Mortgage Group
VeloMortgage.ca

Jeff Dinsmore
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