Conventional loans will now look at your Airbnb income. Here is how far it goes.

Until this fall, an honest answer to “can I use my Airbnb income to qualify?” on a conventional loan was essentially no. There was no topic for it. Lenders either forced short-term rental income into the long-term rental rules, where it fit badly, or told you to look at a DSCR loan instead.

That changed on 2 September 2026. Fannie Mae rebuilt its rental income chapter and gave short-term rentals their own set of rules for the first time. Lenders can apply them now, and must apply them to every application dated 1 November 2026 or later.

It is a real opening. It is also narrower than it sounds, and the arithmetic has a ceiling most people will not expect. Worth understanding both halves before you build a purchase around it.

Four gates, before any math happens

Each of these disqualifies on its own, so they are worth checking before you spend money on anything else.

One unit, and it has to be an investment property

Short-term rental income is permitted on one-unit investment properties only. Not a second home, and not a two- to four-unit building. If you are buying a duplex and planning to short-term the other side, this rule does not reach you — that is the owner-occupied multi-unit path, with its own rental income treatment.

It has to be legally permitted where it sits

The property must be legally permitted to operate as a short-term rental, including compliance with all applicable local registration and licensing requirements. This is the gate that catches people, and it is the cheapest one to check. Plenty of towns that quietly tolerated short-term rentals for years have since written rules, capped permits, or grandfathered a list you are not on. A property can be listed, booked, and profitable today and still fail this test.

Not from an accessory dwelling unit

Short-term rental income cannot be derived from an ADU. The garage apartment, the basement suite, the casita — however well any of them books, that income does not count under this rule.

It has to actually be short-term

Fannie defines a short-term rental as a furnished residential property rented for brief periods, typically less than 30 consecutive days, rather than under a standard long-term lease. Rent it on a normal twelve-month lease and you are simply outside this topic — which, as the arithmetic below shows, is frequently the better place to be.

How the rent gets documented

There are two paths, and which one applies depends on whether you are buying or refinancing.

On a purchase, the lender uses either a Form 1007 rent schedule prepared on a standard long-term basis, or validated short-term rental data from the MLS or a property management company. That second option has to show three comparable short-term rentals, their daily, weekly or monthly rates, how many days each was rented in the last calendar year, and the factors affecting them.

On a refinance, it is your most recent federal tax return — Form 1040 with Schedules 1 and E. If you have owned the property but it has not landed on a return yet, the purchase documentation applies instead.

Worth saying plainly: a screenshot of your own booking calendar is not on that list. Neither is a projection you built yourself. The data has to be validated and it has to be comparable properties, not just yours.

The 50% haircut, worked

This is where the rule gets specific. Take the monthly gross rental amount, multiply it by 50%, and subtract the property’s full payment — principal, interest, taxes, insurance and any HOA. Fannie is explicit that the missing half covers vacancy and maintenance.

Say the property carries a full payment of $2,450 a month and the comparable data supports $4,200 a month in bookings.

• 50% of $4,200 is $2,100.
• $2,100 minus the $2,450 payment is −$350.
• Because that is negative, $350 a month counts against you as a debt.

A property grossing $4,200 a month makes your file harder, not easier. To get to neutral, the bookings have to support $4,900 a month — twice the payment, exactly. At $5,600 a month of gross bookings you land at $2,800, the payment disappears from your ratios, and the surplus $350 does nothing at all. Which brings us to the ceiling.

My recommendation: run this calculation before you write the offer, using the payment rather than the nightly rate. Short-term rental listings are sold on average daily rate and occupancy, and neither of those is the number that decides your loan. The payment is.

The ceiling: it offsets, it never adds

Read this part twice, because it is where plans break. Under the new rule, short-term rental income can only offset that property’s own payment. Fannie’s language is that if the adjusted figure is positive, the lender may use it “to offset the PITIA only.”

It never becomes income. A property that throws off far more than it costs does not increase your borrowing power by a dollar. The best available outcome is that the property becomes invisible in your debt-to-income ratio — and that is the whole of it.

The part that surprises people: long-term rent is worth more

Rent the same house on a normal lease and it leaves this topic entirely, which means it takes the 75% factor that ordinary rental income has always used rather than 50%.

Same property, same $2,450 payment:

• Short-term at $4,200 a month: 50% is $2,100. You are $350 short, and it counts as a debt.
• Long-term at $3,400 a month: 75% is $2,550. You are $100 clear, and the payment drops out of your ratios.

The long-term lease grosses $800 a month less and produces the better loan outcome. Put the break-evens side by side and the gap is stark: a short-term rental has to support $4,900 a month to reach neutral, a long-term lease $3,267 — a difference of $1,633 a month in required gross for the same result.

That does not make short-term renting a bad business. It often earns more after costs, which is why people do it. But as a qualifying instrument, the lower-yielding use is worth more, and if the loan is the binding constraint that is worth knowing before you commit the property to a strategy.

Conventional or DSCR, honestly

The obvious question, now that conventional is an option at all, is whether it is the better one.

Conventional wins on price. Rates are lower than DSCR pricing, there is no specialty-product premium, and you are not paying for a niche underwrite. If your own income comfortably carries the new payment and the rental is incidental to the approval, conventional is very likely the cheaper loan and you should price it first.

DSCR wins when the property is the case. A DSCR loan qualifies on the property’s own coverage rather than your debt-to-income ratio, so the 50% haircut and the offset-only ceiling simply do not apply. Lenders in that market underwrite short-term rentals on twelve-month projections or short-term comps, typically discounting 25% to 35% rather than 50% — and critically, a strong-cash-flowing property can carry itself instead of merely cancelling itself out. That is lender practice rather than agency rule, and it varies, but the structural difference is real. You can run a property’s coverage ratio here.

The honest summary is that conventional’s new short-term rental allowance helps a narrow group: buyers whose income already supports the file and who need the rental property to stop counting against them. For anyone whose plan depends on the rental income doing real work, the 50% haircut and the offset ceiling will usually make DSCR the better structure despite the higher rate.

My recommendation: price both, and do it before the property is under contract. The two products fail in different places — conventional on the haircut, DSCR on the rate — and which one binds depends on numbers you already have.

What this rule does not do

• It does not help a second home. Rental income still cannot be used to qualify a second-home purchase at all. Occasional renting does not disqualify the occupancy, but the income does not count.
• It does not reach two- to four-unit properties. One unit only.
• It does not cover ADUs, whatever they earn.
• It does not make an unpermitted short-term rental financeable. The licensing gate is not a formality.

What is not settled

Two things this article will not pretend to be certain about.

• Whether the current-housing-payment requirement applies. Elsewhere in the rebuilt chapter, a lender must document your current housing payment before using rental income from the subject property. The short-term rental topic sits in that group but does not restate the requirement. Ask on your file.
• How individual lenders will validate “factors affecting” the comparable rentals. The term is in the rule and is not defined. Expect it to vary between lenders until practice settles.

Where guidance is genuinely new, the useful answer is what your lender and the investor buying the loan will actually do with it, on your file, this month. That is worth asking out loud rather than assuming.

Short-term rental figures reflect Fannie Mae Selling Guide Announcement SEL-2026-08, issued 2 September 2026, and Selling Guide topic B3-3.8-03, Rental Income from the Subject Property: Short-Term Rental, dated 2 September 2026. Lenders may apply these requirements now and must apply them to applications dated 1 November 2026 and later. The 75% long-term factor reflects B3-3.8-02 and B3-3.8-04 of the same chapter. DSCR figures describe lender practice rather than agency policy and vary by lender and by month. FHA, VA and USDA treat rental income under their own rules, which this update does not change.