Washington, DC has some of the strictest short-term rental rules of any large US city. For an investor, the rules decide what a property can earn and what income a lender will count. This is a summary for investors, not legal advice. Rules change, so confirm the current position with the Department of Licensing and Consumer Protection.
The primary residence rule
A DC short-term rental license can be held only by a natural person, not an LLC, and only for the host’s own primary residence, checked against eligibility for the homestead deduction. Second homes and investment properties do not qualify. Renters cannot currently get a license either.
Host-present and host-absent stays
| License endorsement | What it allows | Annual cap |
|---|---|---|
| Short-term rental | Renting part of your home while you stay there | None |
| Vacation rental | Renting your whole home while you are away | 90 nights a year, unless an exemption applies |
Licensing and tax
- A two-year license costs $99, applied for through the District’s business licensing portal, with a Certificate of Clean Hands, proof of liability insurance and a housing code self-certification.
- Short stays pay DC’s 15.95% transient lodging tax, which includes a temporary 1% surtax scheduled to end on September 30, 2027. Airbnb and Vrbo collect and remit it, but the host remains responsible.
- The District began ward-by-ward enforcement in September 2025 and has issued hundreds of notices of infraction.
Bills to loosen the rules, including one that would allow renters to host and permit a license on a second property, have been introduced but had not passed as of this writing.
The suburbs
Montgomery and Prince George’s counties in Maryland also limit short-term rentals to a host’s primary residence, and Northern Virginia jurisdictions regulate them closely. Check the specific address before you count on nightly income.
How a lender counts the income
Because an investment property in DC cannot be licensed for short stays, we underwrite DC rentals on long-term market rent. That is also the safer assumption across most of the suburbs. Group-house and by-the-room rentals, which are common near universities and Metro stations, are counted at the appraisal’s market rent.
Common questions
Not as an investment property. DC licenses short-term rentals only in a host’s own primary residence, and a host-absent vacation rental is capped at 90 nights a year.
No. Only a natural person can hold the license, and only for their primary residence.
No. We use long-term market rent for DC investment properties.
See how rentals are financed on the DSCR rental loans page.