Vacation Rental Property
Question: My borrower is purchasing a single family property as an investment. The property detail within the contract addresses the property as a VRBO- (Vacation Rental by Owner) or AIRBNB.
• Do the Conventional agencies consider these as bed and breakfast?
• Is the intended property use allowed?
• Can we use rental income to qualify?
Answer: As verified with both Fannie Mae and Freddie Mac; The Intended purpose to purchase a weekly rental such as a VRBO & AIRBNB is allowed; however the use for rental income from the property is not allowed as there is not a standard lease agreement - Fairway requires a lease agreement (generally 12 mos) & receipt of security deposit check.
VRBO & AIRBNBs are not viewed as "bed and breakfast" property types which are ineligible per guidelines.
If the property was being refinanced; the use of rental income would be allowed based on tax returns - dependent on how many months the income is claimed on the schedule E and supported market data.
Please be reminded regardless of the use of income; the agencies still require documentation of the gross rentals for the rental unit with the correct appraisal forms.