Homeowners are now using rental income earned through Airbnb to refinance their mortgages.
It's a pilot program launched just a few weeks ago that took off quickly, and new loans are already closing.
It's another program from mortgage giant Fannie Mae designed to help more borrowers get better loans in today's tight mortgage market. Airbnb already tracks the income data and will now provide documentation for a mortgage application.
"We want to enable those borrowers to be able to refinance and lower their mortgage costs and tap into their housing equity," said Jonathan Lawless, vice president of customer solutions at Fannie Mae.
Partnering initially with three lenders, Better Mortgage, Quicken Loans and Citizens Bank, Fannie Mae allows borrowers to use the rental income as part of the income qualification to refinance their home loans. This helps them either to get a better interest rate or to take cash out for other expenses, like renovations or education.
"Some of the nation's largest financial institutions understand that Airbnb is an economic empowerment tool that can generate important income for families, and they are working to recognize this," wrote Nathan Blecharczyk, Airbnb co-founder and chief strategy officer, in a release.
Borrowers are required to have 12 months history of Airbnb earnings that they can document, and the home must be their primary residence. The program is not for investors using multiple homes only as rental properties.
"Because of the sharing economy, the way people use their homes has changed … and now finally the mortgage industry has caught up," said Vishal Garg, CEO of Better Mortgage. "We are able to use that income in actually underwriting the value of your house, your ability to make a payment on that loan, and then qualify you for a lower rate."
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