Short-term vs long-term rental DSCR loans in Louisiana
TL;DR: A long-term rental DSCR loan uses a lease or market rent and is the default for most Louisiana investor properties. A short-term rental DSCR loan can use booking income, but only where that use is lawful, and New Orleans tightly restricts whole-home short-term rentals in residential zoning.
| Factor | Long-term rental DSCR | Short-term rental DSCR |
|---|---|---|
| Income evidence | Signed lease or appraiser's market-rent estimate | Booking history, platform statements or a program-specific projection |
| Legal permission | Standard rental use in most locations | Must be lawful at the exact address; permits may be required |
| New Orleans | The usual route for investor properties | Whole-home use in residential zoning is tightly restricted |
| Income stability | Monthly rent with periodic turnover | Seasonal; event and festival calendars create peaks and gaps |
| Insurance | Landlord (dwelling-fire) with wind and flood as needed | Coverage written for short-term guest use, plus wind and flood |
| Operating costs | Repairs, turnover, management | Cleaning, furnishings, utilities, platform and management fees |
| Fallback | Is already the fallback | Should still work as a long-term rental if permission changes |
Start with permission, not projected bookings
Louisiana's visitor economy makes short-term rentals tempting, but demand does not create permission. New Orleans regulates short-term rentals more tightly than most of the state. Non-commercial permits in residential zoning have carried per-block limits and operator-presence requirements, commercial short-term rentals are confined to certain non-residential and mixed-use districts, and the rules have changed through litigation. Outside New Orleans, parishes, municipalities and associations set their own rules.
Wholesale lenders count short-term income only from a lawful use. Before you build a revenue forecast, confirm with the city or parish what is allowed at the address, and read any condominium or homeowner association documents for rental restrictions.
How the income is measured
For a long-term rental, the ratio uses the lease rent or the appraiser's estimate of market rent. For a short-term rental, programs that accept the income look at booking history, platform statements or a program-specific estimate, and they may average across a full year. Gross booking totals often include taxes and cleaning fees that are not usable income, so expect the qualifying figure to be lower than headline revenue.
Louisiana demand is seasonal. Festival weekends, football Saturdays and holiday travel can produce strong months, while late summer and hurricane season can be quiet. A ratio that looks healthy in an average month needs reserves to carry the slow ones.
Costs that differ between the two
A short-term rental carries costs a long-term lease usually shifts to the tenant or does not incur: utilities, internet, furnishings, cleaning, supplies, platform fees and more active management. Insurance needs to be written for guest use, and wind and flood exposure still apply. Those costs do not all appear in the DSCR formula, but they decide whether the property actually makes money.
A long-term rental has its own costs, including turnover, repairs and the risk of a slow-paying tenant. Louisiana landlords must return security deposits within one month after the lease ends, with an itemized statement of any amounts withheld, under La. R.S. 9:3251. Build a management plan that can meet those obligations.
Test the fallback before you buy
Run the numbers twice: once as a short-term rental and once as a conventional long-term lease at the same address. If the property only works as a short-term rental, a rule change, an association vote or a weak season can break the plan. If it also carries its payment as a long-term rental, the short-term income becomes upside rather than a requirement. Use the DSCR calculator with both rent figures, then request a review.
Common questions
Can I use Airbnb income for a Louisiana DSCR loan?
Some programs accept short-term rental income with the right documentation, but only where the use is lawful at that address. Confirm local permission and association rules first.
Why are most New Orleans investor properties underwritten on long-term rent?
Because the city tightly restricts whole-home short-term rentals in residential zoning. Unless a lawful permit or commercial zoning supports short-term use, wholesale lenders rely on long-term rent.
Do short-term rentals need different insurance in Louisiana?
Usually. Ask for coverage written for short-term guest use, and price wind and flood coverage separately. A standard homeowner policy is not designed for rental activity.