Most owners see the money landing in their Airbnb account and think, “Nice buffer.” But Short Term Rental (STR) income can do far more than soften a few bills — it can meaningfully strengthen your borrowing capacity and open the door to your next investment.
If you only read one section, read this:
- Airbnb income can help you borrow more — but banks don’t treat it like normal rent.
- Different lenders assess the same income very differently. There’s no single rule.
- Most lenders only count 65–80% of your STR income (sometimes less).
- Lodged tax returns matter more than Airbnb statements.
- Big deductions reduce tax, but they can also reduce borrowing power.
- Timing renovations and expenses around loan applications makes a real difference.
- The right broker and accountant can materially change your outcome.
In short: Airbnb income rewards planning, not guesswork.
To make this clearer, I consulted with Jef at Step Up Loans who explained there are the big factors that shape how lenders treat STR income:
How lenders assess STR income
- Many still see it as less predictable than long‑term rent.
- Documentation requirements are heavier (12 months is common).
- Income is usually shaded — lenders may only count 65–90% of it.
- ANZ and Bankwest are more STR‑friendly, while other majors remain conservative.
In other words, strategy matters — especially around documentation, timing, and lender choice.
From an accounting perspective, your STR income appears in your tax return just like any other investment property. But banks place different weight on different evidence. Jason Gillespie at Wingr Accountants highlighted the following:
What banks actually prefer to see
- Lodged tax returns — the strongest and most credible form of income evidence.
- One to two years of consistent STR income.
- Clean, up‑to‑date ATO accounts.
- Minimal unexplained variances year‑to‑year.
Two years of consistent taxable income is ideal, though some lenders will work with one if the deal is otherwise strong.
Where investors sometimes get caught is in the tension between minimising tax and maximising borrowing power.
Common traps
- Claiming large deductions that reduce taxable income (helpful for tax, unhelpful for borrowing).
- Doing major upgrades in the same year they want to apply for finance.
- Not keeping clear records of STR‑specific expenses.
Forward‑planning principles
- Decide early when you’ll need strong taxable income for lending.
- Time renovations or large deductible expenses for after your loan assessment year.
- Keep all STR‑related expenses well documented for both tax and lender clarity.
Done well, STR income becomes an engine — not just for cash flow, but for financing growth.
Why STR income can lift borrowing capacity
- Higher gross returns than long‑term renting.
- Strong regional performance patterns (e.g., Brisbane events, Sunshine Coast peaks).
- Lenders increasingly willing to accept STR income with the right evidence.
Clean tax records + consistent income + STR‑friendly lender = a stronger serviceability position.
And here’s why this matters: I recently went through the process of securing another investment loan myself and saw firsthand how differently lenders treat Airbnb income.
It wasn’t clear-cut — and Positive Money Mortgage Broker David Woods feedback helped explain why.
How lenders actually calculate “ability to repay”
Across the 40+ lenders brokers can access, there are 30+ different borrowing outcomes from the same income set.
There is no single formula — policy varies lender to lender.
How standard rental income is usually assessed
- Proven via a property manager’s rental statement (under 60 days old) or a tenancy agreement plus bank statements.
- Most lenders assess 90% of rent, then assume ~20% expenses (management, rates, insurance).
- Others assess 80% of rent, only counting expenses above 20%.
- Some assess 75%, allowing for 5% vacancy + 20% expenses.
- A number cap rental income at 7% of the property’s value, regardless of actual rent.
How short-term rental income differs
- Most lenders rely on lodged tax returns to confirm both income and expenses.
- STR income is discounted further due to variability and higher operating costs.
- Lenders assessing 80% for standard rent may assess 65–70% for STR.
- Those assessing 75% often assess 65% for STR.
- Some lenders still won’t accept STR income at all and instead request a standard rental appraisal.
This is why planning, documentation, and lender selection are critical when using Airbnb income to grow your portfolio.
If you’d like to understand how your Airbnb income could strengthen your lending position, or you’d like a free performance appraisal, I’m always happy to run the numbers with you.
You can also consult with Jason Gillespie at Wingr Accountants and Jef Miles at Step Up Loans, or David Wood.