This page covers financing a property you plan to rent on Airbnb, VRBO or a similar platform: how lenders treat short-term rental use and income, what to disclose, the financing routes investors use, and insurance. It is part of WealthNorth’s guide to investment property financing. Before financing anything, check that the city allows a short-term rental at that address; many large cities limit them to the host’s principal residence (see Airbnb rules by city). Whether a short-term rental earns more than a long-term lease after its extra costs is covered in Airbnb vs long-term rental.
How lenders see a short-term rental
| Factor | Short-term rental | Long-term rental |
|---|---|---|
| Income used to qualify | Ask the lender; mortgage insurers’ rental programs confirm rent with a lease, an appraiser’s market rent, tax returns or a history of bank deposits | Part of the lease rent is counted |
| Property use | May breach a residential mortgage’s terms if not disclosed | Standard rental use |
| Down payment | At least 20% if you won’t live there | At least 20% if you won’t live there |
| Insurance | A policy that covers short-term guests | A landlord policy |
Mortgage Rules for Airbnb Properties
Can You Get a Mortgage for an STR?
| Scenario | Mortgage Availability |
|---|---|
| Primary residence with occasional Airbnb (spare room) | Standard mortgage; check the lender’s terms on rental use |
| Primary residence with frequent Airbnb (whole home while travelling) | Standard mortgage, but check lender terms for commercial use |
| Second property used exclusively as STR | Residential mortgage with at least 20% down, but many lenders restrict STR use in the mortgage terms |
| Property purchased specifically as STR investment | Residential or commercial mortgage: must find a lender whose terms permit STR use |
Lender Policies on Short-Term Rentals
Each lender sets its own policy, so ask every lender you consider two questions before applying:
- Do the mortgage terms allow short-term rental use of this property? Standard terms can restrict renting. CIBC’s standard charge terms, for example, say that if a property is approved as owner-occupied, you agree not to rent or lease any part of it without first getting the bank’s written approval.
- Does the lender count short-term rental income, and how? For insured mortgages, CMHC’s guidance is: For an insured mortgage, CMHC adds rental income to your income rather than offsetting it: up to 50% of the gross rent from the property being insured (with its taxes and heat left out of the ratios), up to 100% of a secondary suite's rent in an owner-occupied two-unit home, and the net rental income of other rentals you own; these are maximums, and a lender can use its own method if the result is at least as conservative. Ask whether and how the lender counts nightly income.
A mortgage broker who places STR mortgages can compare lenders’ answers.
Making STR Income Count for Qualification
Requirements vary by lender, so confirm what yours asks for. Canada Guaranty’s insured program for two- to four-unit rentals, for example, confirms rental income with at least one of these documents:
| Requirement | Details |
|---|---|
| T1 tax return | Shows rental income reported to CRA |
| Bank statements | A history of deposits showing the rent was received |
| Lease or appraisal | A signed lease, or the fair market rent from an approved appraiser |
Qualifying on a long-term lease and then switching to STR can breach the mortgage terms, so disclose the planned use.
Financing Strategies for STR Investors
| Strategy | How It Works | Pros | Cons |
|---|---|---|---|
| Traditional mortgage (20% down) | Buy with standard investment mortgage; operate as STR if lender permits | Best rates | Many lenders restrict STR; income may not qualify |
| HELOC from primary residence | Use equity in your home for the STR down payment | Flexible; no need to qualify on STR income | Variable rate; ties up home equity |
| Refinance primary residence | Pull cash from home equity; purchase STR outright or with smaller mortgage | Access to primary residence rates | Increases primary mortgage; appraisal needed |
| Alternative lender mortgage | A lender with STR-friendly policies | May accept STR income | Higher rate and fees |
| Private lending, then refinance | Buy with private money, build an STR income record, then refinance | Fast closing; little income qualification | High rate and fees; the refinance isn’t guaranteed |
| Joint venture | Partner with someone who has capital; you manage the STR | Less capital needed | Shared profits; needs an agreement (see joint venture real estate) |
| Cash purchase | Buy outright, no mortgage | No lender restrictions | Requires full purchase price in capital |
City and provincial rules
Short-term rental rules are set mostly by municipalities, and in some provinces by provincial registration or principal residence laws. Several large cities allow a whole-home short-term rental only in the host’s principal residence, which rules out a dedicated investment property there; other cities license investment short-term rentals. Licensing, night limits, accommodation taxes and fines by city are covered in Airbnb rules by city.
Insurance for short-term rentals
| Coverage | What to know |
|---|---|
| Homeowner policy | Usually excludes or limits commercial short-term rental activity; claims can be denied if the insurer wasn’t told |
| Landlord policy | Written for long-term tenants, not nightly guests |
| Short-term rental policy | Covers the building, contents and liability for paying guests; available from specialized insurers and some mainstream ones |
| Platform host protection | Platforms offer host damage and liability programs, but with exclusions; they don’t replace your own policy |
Lenders require the property to be insured for its actual use, so the insurance and the mortgage disclosure need to match.
Revenue, costs and tax
A short-term rental usually earns more gross revenue than a lease but carries costs a lease doesn’t: cleaning, furnishing, supplies, utilities, platform fees, higher insurance and licensing. The comparison, with the occupancy needed to break even, is in Airbnb vs long-term rental. Income is reported like other rental income (see how rental income is taxed), though Providing additional services, such as cleaning, security and meals, may mean you are carrying on a business. A stay of less than one month that costs more than $20 a night is a taxable supply. A host has to register for the GST/HST once taxable revenue passes the $30,000 small supplier threshold; see Airbnb tax rules. A dedicated short-term rental doesn’t qualify for the principal residence exemption when sold.
Is financing a short-term rental worth it?
| Working for you | Working against you |
|---|---|
| Higher gross revenue in strong tourist or business-travel markets | Principal residence rules in several large cities |
| A documented income record (tax returns, bank deposits) is the kind of evidence insurers’ rental programs accept | Whether STR income counts at all depends on the lender |
| You can block dates for your own use | Furnishing, cleaning, insurance and management cost more than a lease |
| Full expense deductions against the income | GST/HST registration above the small supplier threshold; more record keeping |
Related resources
- Rental property mortgages
- How rental income affects mortgage qualification
- Property management guide, including short-term rental co-hosts
Sources
The figures and rules on this page come from these sources, last checked against them between September 24, 2026 and October 1, 2026. How we check facts.
- Canada Revenue Agency: When to register for and start charging the GST/HST
- Canada Revenue Agency: Rental Income
- Canada Revenue Agency: GST/HST: Type of supply
- Canada Revenue Agency: Platform-based short-term accommodation: GST/HST for digital-economy businesses
- CMHC: Calculating GDS / TDS
- CMHC: Rental Income
- Financial Consumer Agency of Canada: How much you need for a down payment