Hosting a place on Airbnb can be a lucrative undertaking—although financing the initial investment might seem daunting. To help you gain a greater understanding of financing an Airbnb business, we’ll cover the main options for funding, tips to help you successfully finance the venture, and answers to some frequently asked questions.

Can You Finance an Airbnb Business?

There are several different options for financing an Airbnb business. Keep in mind that it can typically be more challenging to procure funds for an investment property destined to be rented than a property purchased as the borrower’s main residence. This is because lenders often consider it to be a riskier investment and in general require a higher cash deposit to secure its financing.

From a lender’s point of view, if money runs tight, you’re more likely to continue paying the bills on your main residence and your second home will probably be less of a priority. Short-term rentals are also considered riskier than long-term rentals, as they require more attention to keep the space regularly occupied. A few weeks without guests could create difficulties in paying back the borrowed funds.


When evaluating your financing options, consider your risk tolerance, financial standing, credit history, and what your goals are for your Airbnb.

Airbnb Financing Options

While launching an Airbnb business can seem like an expensive undertaking, there are viable options available to help you finance your venture. Here are some of the common ways you can fund your new investment.


Taking out a mortgage for your rental property could give you a reliable loan with favorable interest rates. However, qualification may be difficult—you might need to contribute a bigger down payment, have a personal credit score of at least 640 to 700, maintain higher cash reserves, and have a lower loan-to-value ratio.


Airbnb recently worked with Fannie Mae, among other lenders, to make it easier for hosts to refinance their mortgages. The funds from refinancing can be put toward investing in rental accommodation.

Home Equity Loan or Line of Credit

A home equity loan, often known as a second mortgage, can provide you with a lump sum of cash that you can then put toward an investment property. The money is repaid on a regular basis with set rates. Home equity lines of credit (HELOCs), meanwhile, work like credit cards—borrowers have access to a certain amount of funds. The funds used must be repaid with interest.

Owner-Occupied Investment Property

If you purchase a multi-unit property and live on-site, you may qualify for better terms, lower interest rates, and funding that otherwise wouldn’t be available. You must meet specific criteria in regards to how much time you live in the space, how soon you must move onto the property after closing, and more, so make sure that you understand all of the requirements beforehand.

Small Business Funding

Consider looking into small business funding options from the US Small Business Administration or through Airbnb partnerships with Fannie Mae, for example, when deciding how to back your Airbnb business. One advantage of small business funding is that the money can be used to fill most business needs you may have, whether that’s buying inventory and equipment or covering day-to-day costs.

Hard Money Loan

Hard money loans are short-term loans from private lenders that are backed by property or assets. If a borrower defaults on the loan, the lender can take possession of the collateral. These loans tend to have easier qualifications as the lender is more interested in the value of the asset or property you’re buying.

Hard money loans usually come with higher rates, higher fees, and shorter repayment terms. Borrowers often consider hard money loans after they’ve been denied more traditional forms of financing, or if they’re looking for a quicker route to funding.

Tips for Successfully Financing an Airbnb Business

Financing an Airbnb business doesn’t have to be complicated. Here are some pointers to keep in mind to ensure a smooth funding process:

  • Understand the investment you’re making. Why are you investing, and what are you hoping to get out of it? Being clear about your objectives will help you identify what kind of funding to pursue.
  • Shop around and compare offers from different lenders. When considering your financing options, make sure to find the best fit for your needs.
  • Estimate your predicted expenses. You’ll want to consider maintenance costs and any additional insurance you may need. Also consider the time commitment of cleaning, upkeep, and responding to guests if you will be in charge of these tasks or the cost associated with them if you will hire someone else to manage them for you. Cleaning expense has been an important cost item for Aibnb entrepreneurs. Recently, Airbnb added a cleaning fee as a charge for guests to cover this recurring cost item.
  • Do your research. Before purchasing a home to use as an Airbnb rental, you’ll want to familiarize yourself with the local laws regarding short-term rentals. Also, check the listings in the area to get a feel for their vacancy rates and price points.

Frequently Asked Questions (FAQs)

How does Airbnb work?

Airbnb is an online platform where hosts can list their spaces and guests can find accommodation, often in homestays. The site is known for its unique options—offering housing in castles, treehouses, and tiny houses, among many other choices. Airbnb also offers in-person or online experiences, often hosted by a local, that are specific to a certain area.

When did Airbnb go public?

Airbnb went public on Dec. 10, 2020, with the ticker symbol “ABNB.” On its opening day, the company’s public offering price was $68 per share.

What percentage does Airbnb take from the hosts?

Airbnb offers a couple of service-fee structures for hosting. These include options for hosts and guests to both pay services fees as well as a host-only fee where the entire service fee is deducted from the host payout. Splitting the service fee with the guest is the most common option, with most hosts paying a 3% fee and a guest paying under 14.2% of the booking subtotal. However, fee rates may increase in certain situations.

How do you become an Airbnb host?

To become an Airbnb host, sign up on the company’s website and create a listing for your space. Then include some basic information, a description, and photos of the rental. When you’re available to host, you’ll need to establish your house rules and set your prices. Airbnb offers detailed resources on its website to help with the hosting process.

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