Guild Mortgage's new loan allows Airbnb income to qualify for refis
Guild Mortgage is targeting Airbnb hosts with its new refinance program, allowing them to use short-term rental income to qualify for a new loan on their owner-occupied primary residence.
The typical conforming mortgage programs do not permit lenders to consider short-term rental income for owner-occupied properties; government programs do not allow this income for underwriting for all properties. "As more people rent part of their home through partners like Airbnb, it's important that lenders are proactive in recognizing this type of income," Erin Watts, vice president of product strategy, said in a press release.
"We're looking forward to opening more doors to Airbnb hosts who are interested in refinancing their mortgage. With lower rates driving an increase in refinances, there should be strong interest."
Properties can be one-to-four unit homes or located in a planned unit development. For borrowers applying for a rate and term refi, the maximum loan-to-value ratio is 97%; for those taking cash out of the property, the LTV drops to 80%. Borrowers need a minimum 620 credit score and their debt-to-income ratio cannot exceed 50%.
This program is considered a qualified mortgage product.
Applicants must document proof of their Airbnb rental income by providing two years of their personal tax returns, including Schedule E. They must also provide an Airbnb income statement that demonstrates a minimum two-year history of receiving short-term rental income from the borrower's principal residence. Or, if there is between 12 and 24 months of stable history of short-term rental income, a percentage of that may be used to qualify for the loan.
They do not have to be existing Guild customers, the company added.