What Is a DSCR Loan, and Should You Use One for an Airbnb in the Poconos?

Buying a vacation rental? Don’t assume the financing is simple.

If you’re looking at Airbnbs in the Poconos, you’ve probably seen DSCR loans marketed as the “easy” way to finance a property. No tax returns, fast closings, and supposedly perfect for Airbnb investors.

Just because the loan closes fast doesn’t mean the deal will work.

Here’s what a DSCR loan actually is, why it’s popular with Airbnb buyers, and when it becomes a real risk.

What does DSCR mean, and how does the loan work?

DSCR stands for Debt Service Coverage Ratio.

Instead of looking at your personal income, the lender qualifies you based on how much rental income the property is projected to generate.

DSCR = Net Monthly Income ÷ Monthly Mortgage Payment

So if a property brings in $3,000 per month and your payment is $2,400, your DSCR is 1.25. Most lenders want to see a ratio between 1.1 and 1.25.

It’s one of the few loan products that lets the deal stand on its own.

Why are DSCR loans so appealing for Airbnb buyers?

If you’re self-employed, investing through an LLC, or building a rental portfolio, DSCR loans sound ideal:

• No W-2 or tax returns

• Based on property income, not your job

• Fast closings, sometimes 2 to 3 weeks

• Works for LLCs and multi-property deals

• Good for business owners with low reported income

  
  

You’ll often hear them pitched as “no-doc” or “Airbnb investor” loans.

And for the right buyer, they can work. But in a market like the Poconos, they also carry risk.

Does a DSCR loan actually make sense in the Poconos?

Here’s what I’d look at before moving forward.

Is the township actively issuing Airbnb permits?

Some areas like Tobyhanna, Kidder, and Coolbaugh are permitting new Airbnbs. Others are on pause, capped, or backlogged. If your permit is delayed 6 to 8 weeks, your Airbnb can’t generate income, but your mortgage still starts.

Is the income projection realistic?

Many lenders use AirDNA or similar tools for projections. But those don’t account for:

• Gross vs. net income

• HOA guest restrictions

• Seasonal amenity closures

• Permit caps or Airbnb bans

• Cleaning and turnover costs, often $8,000 to $20,000 per year

  
  

A 1.25 DSCR on paper might be a 0.8 in real life once you remove unrealistic assumptions.

Will the property cash flow year-round?

If the deal only works in July and December, you’ll feel the hit in March. Poconos Airbnb income is seasonal. Spring is slow, and guest access matters more than investors realize.

Jeremiah’s take: We’ve seen this firsthand

At Galvanized Management and Investment Real Estate of the Poconos, we’ve helped Airbnb buyers close on DSCR loans, and we’ve also stepped in when those deals started to unravel.

Here’s what I’d tell any investor:

• DSCR loans aren’t the problem. Unrealistic expectations are.

• If you buy in a non-permitted area or assume steady income, you’re setting yourself up for trouble.

• You need reserves for slow months and startup delays.

• And if you’re not running true net numbers, the projections won’t save you.

  
  

This isn’t passive income unless you hire someone like us or set it up with realistic buffers.

Should you use a DSCR loan to buy an Airbnb?

You can. Just don’t expect it to be magic.

They work best when:

• The property is legally permitted for Airbnb use

• You’ve confirmed zoning and HOA rules

• You understand seasonal fluctuations

• You have reserves for permitting delays and repairs

• You’re not basing your numbers on top-line AirDNA data

  
  

Need help before you buy?

We walk properties, check township zoning, and flag Airbnb red flags before you close. We also manage 175 plus rental units, so we know how this plays out after closing.

If you're thinking about using a DSCR loan, let’s run the numbers together. That’s what we do. Contact us to start the conversation.

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FAQ: DSCR Loans for Purchasing an Airbnb in the Poconos

What is a DSCR loan, and how does it work for Airbnbs in the Poconos? 

A DSCR (Debt Service Coverage Ratio) loan lets investors qualify based on projected rental income instead of personal income. In the Poconos, that means the lender looks at how much your Airbnb is expected to earn, not your W-2 or tax returns. But be cautious. If the property isn’t able to be permitted or you face seasonal slowdowns, your real income may fall short.

Can I use a DSCR loan to buy an Airbnb in Tobyhanna, PA? 

Yes, if the township is currently issuing Airbnb permits and the property meets zoning and safety requirements. Tobyhanna Township has active permitting, but you must apply, pass inspection, and follow local rules. A DSCR loan won’t help if you can’t legally rent the property out.

What’s the minimum DSCR ratio most lenders require? 

Most DSCR lenders want to see a ratio between 1.1 and 1.25, meaning your rental income should exceed your mortgage payment by 10 to 25 percent. In the Poconos, make sure that projection is based on actual seasonal income, not inflated summer-only numbers.

Are DSCR loans a good idea for Airbnbs in the Poconos? 

They can work, but only if:

• The property is permitted or permit-eligible

• You have reserves for spring slowdowns and startup delays

• You base your numbers on net income, not just AirDNA projections

• You understand the zoning, HOA, and amenity limitations in your target area

  
  

We’ve seen DSCR loans work, and we’ve also stepped in when deals went sideways.

How long does it take to get an Airbnb permit in Monroe County? 

It depends on the township. Some permits in Tobyhanna or Coolbaugh can take 4 to 8 weeks, especially if inspections are delayed or paperwork is incomplete. If you're buying with a DSCR loan, plan for that gap in income.

Do DSCR lenders count Airbnb income or long-term rent comps? 

Some do, some don’t. Many underwrite based on long-term rental comps unless you prove Airbnb legality and submit Airbnb income history. Always ask if Airbnb income will be accepted and get it in writing before you close.

What’s the biggest risk of using a DSCR loan for an Airbnb? 

That you buy a property expecting Airbnb income, but can’t legally operate it or hit your projected numbers. In the Poconos, this usually happens when:

• Permits are delayed or denied

• The area has HOA restrictions

• Income drops during the off-season

• Cleaning and guest costs are underestimated

  
  

Can I close with a DSCR loan and get the Airbnb permit later? 

Technically, yes, but it’s risky. You’ll owe the mortgage even if you can’t legally rent the home. We recommend verifying zoning, submitting your Airbnb application, and planning a cash cushion before closing.

Do you help buyers evaluate DSCR deals before closing? 

Yes. At Investment Real Estate of the Poconos, we walk the property, confirm zoning, flag permit issues, and run net income estimates. If you're using a DSCR loan, we’ll help you spot what most lenders and agents miss.

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About the Author

Jeremiah Noll is a Poconos-based broker (License #RM425834) and rental operator who runs Galvanized Management and iREPoconos. He helps owners and investors make smarter decisions by focusing on what actually happens after the purchase: rules, costs, operations, and performance.

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Reviews & Testimonials

Real comments from clients of Investment Real Estate of the Poconos, covering the full journey from purchase decisions to ongoing returns. Read More Reviews

“Jeremiah and his team are exceptional! I purchased two investment properties with Jeremiah and both times my expectations were exceeded. Jeremiah is prompt, knowledgeable, provides great insights and communicates effectively! Highly recommended, if you’re looking for a property in the Poconos area!”

- Rhett James, View on Google