Short-term rental sites such as Airbnb have changed the game for homeowners. Renting out your entire home—or part of it—is an attractive way to make extra cash. In fact, some developers are even building homes aimed at first-time home buyers with separate bed-and-bath areas designed to be rented out—a twist on the classic in-law suite.
But how does your plan to host short-term renters play out when you’re applying for a mortgage? Rent money will increase your yearly earnings, but do lenders count future revenue as income? Can plans to maintain a short-term rental help you get a mortgage?
For the most part, no. Stephen Rybak, senior managing director at GuardHill Financial Corp., says a lender will never consider potential income from renting out part of a single-family home. And it doesn’t matter if we’re talking about a space that’s detached from the house (e.g., a garage apartment, studio, or casita)—it’s all technically part of a one-family home.