You may want to think twice, especially if you want to refinance. Homeowners who rent rooms are facing additional scrutiny when applying for loans. Rooms for rent services like Airbnb are causing some confusion between residential and commercial property. The issue appears to be that lenders don’t know how to classify loans in the “Airbnb age”. Historically, a house was either a primary residence or an investment property. Mortgages on the latter are often viewed as riskier because owners had less of a personal connection to the house and rental income isn’t always reliable. Now, the distinction isn’t so clear-cut. Online rental services are spreading rapidly. Airbnb’s website had 455,223 active listings in the U.S. as of July, up 80% from a year earlier, according to research firm YipitData. That is posing challenges to lenders and frustrating some customers, illustrating how fast-paced technological change can create new and unforseen problems.

So, you are an Airbnb host and making some pretty good income. You feel that this will help improve your credit and also work in your favor when applying for a loan. Well, not exactly. The bank or lender doesn’t typically allow home-equity lines of credit on properties in which the homeowner is operating a business, including Airbnb. But, you may want to consider a couple of things that I researched regarding Airbnb. Most lenders find out about Airbnb activity on your income tax returns. Talk to your CPA and ask what the law is on filing income on homes/rooms that are rented out for fewer than 15 days/year. There may be a tax code that allows for this income to be tax free.

If one lender or bank won’t approve you for a loan then shop around. Not all mortgage lenders have the same view on how to treat short-term rental activity on properties. And maybe an investment property mortgage is a better idea for your needs. Another good piece of advise is to contact a home insurance provider to see what there position is on Airbnb rentals. Many policies don’t cover commercial activity, including short-term rentals. Gather up as much information as you can before hopping on the Airbnb train!