Does A DSCR Lender Use The Old Lease Or Short-term Projections — The Quick Read: Neither one automatically wins. Underwriters compare the signed lease against the appraiser’s independent market-rent opinion and qualify the loan on whichever number is lower. A below-market lease drags the ratio down even if today’s rents are higher. Short-term rentals run through a completely different track — either trailing platform income or a discounted market-data projection — because a nightly rate doesn’t translate cleanly into monthly lease math.
DSCR underwriting isn’t asking which income figure makes the deal look best. It’s asking which figure it can actually verify and defend. That distinction shapes every decision described below, and it’s the reason an investor’s own optimistic rent number rarely gets the final word.
DSCR Calculator
Run the numbers in your market
Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Sep 17, 2026
Prefilled with local estimates — enter your own rent or nightly figures, taxes, insurance, and HOA for a more accurate picture.
Program parameters update from Lendmire’s centralized guideline source. Taxes and insurance are editable estimates.
As of Sep 17, 2026 · General Freddie Mac market benchmark, not a Lendmire loan offer. Rent, nightly rate, occupancy, taxes, and insurance are editable estimates. Short-term rental figures are estimates only and vary significantly by season, property type, management approach, and local short-term-rental rules — confirm local regulations before relying on them. Qualifying income for short-term rentals varies by program — some use appraisal market rent, others use documented STR history or projections — and is confirmed in underwriting. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
What Number Does The Lender Actually Use?
The short answer: whichever is lower, the lease or the appraiser’s opinion. When a tenant is already in place, underwriting pulls the signed lease and sets it next to the appraiser’s market-rent conclusion. If the lease is below market — maybe it was signed two years ago, maybe the landlord wanted a fast fill — that lower contract number is what feeds the debt-coverage ratio. If the lease happens to sit above market, the appraiser’s figure caps it. The investor doesn’t get credit for the extra spread.
Why the lower-of approach? A lease is a legal obligation the tenant is actually paying. An appraiser’s market-rent opinion is an independent, third-party estimate based on comparable rentals nearby. Neither one alone tells the whole story. So most DSCR programs use both and default to the more conservative number. Vacant properties skip this comparison entirely. With no lease to check against, the appraiser’s opinion becomes the sole basis for the rent used in lender review. That makes reviewing the comp grid the single biggest variable in whether the file clears.
How Does The Appraisal Actually Produce A Rent Figure?
A DSCR appraisal does two jobs in one report: it values the property for loan-to-value purposes, and it produces a market-rent opinion for the DSCR numerator. On a single-family rental, that rent opinion typically shows up on Fannie Mae’s Form 1007, the Single-Family Comparable Rent Schedule — a document Freddie Mac’s own form text describes as the tool a lender uses to obtain market rent from the appraiser for a conventional investment property. Fannie Mae’s live form page confirms the same purpose. On 2-4 unit buildings, a comparable operating-income schedule fills the same role.
DSCR and non-QM lenders aren’t bound by agency selling guides, but across the wholesale network Lendmire works with, most appraiser panels still use these same forms because they’re a proven, standardized way to document rent. The appraiser identifies rental comps that actually leased nearby, adjusts for size, condition, and amenities, and lands on a supported monthly figure. That’s a different process than pulling an asking-rent listing off a rental site, and it’s why underwriters trust the appraisal over an investor’s own spreadsheet.
Why Doesn’t A Short-Term Rental Just Use The Same Form?
Because Form 1007 is built around monthly-lease math, and a nightly rental doesn’t work that way. McKissock Learning’s summary of Fannie Mae guidance is blunt about it: appraisers cannot take a nightly rate, multiply it by 30, and call that monthly market rent. That shortcut ignores furnishing costs, guest-services expenses, seasonal vacancy, and the operating drag baked into short-term rental economics. A property that grosses well on paper at $250 a night might net far less once cleaning fees, platform commissions, and off-season gaps get factored in.
Because of that, short-term rental files run through a separate documentation track. Across programs Lendmire places files with, the common approach breaks into two paths:
- Refinance with operating history: twelve months of actual platform booking income is the preferred source, applied at roughly 80% of gross to account for expenses and vacancy.
- Purchase with no history: the appraiser produces a separate short-term-rent income analysis rather than a standard 1007, and that projected figure gets the same 80%-of-gross treatment before it feeds the ratio.
Lendmire’s guide on what counts as short-term rental income for a lender walks through how that documentation stack gets assembled property by property.
New Construction And Vacant Units — Whose Opinion Controls?
On a brand-new property with no lease history, the appraiser’s opinion is the entire qualifying basis, and there’s nothing to check it against. That’s a meaningfully different risk profile than an occupied rental with a lease sitting next to the appraisal. If a whole subdivision went up in the same building cycle, comparable rental data can be thin, which puts extra weight on how carefully the appraiser selected comps.
Programs handle vacant units in small multifamily buildings differently. Some credit the appraised market rent for the empty unit. Others treat a heavily vacant building more conservatively. This varies by program — it’s not a fixed industry rule. Investors should confirm the rules before they model income on a partially-vacant 2-4 unit purchase.
Does A Signed Lease Above Market Rent Help The File?
Not typically. Even a strong, above-market lease gets capped at the appraiser’s market-rent conclusion in most DSCR underwriting. The logic: if the current tenant leaves, the next lease is expected to land closer to market, not at the premium the current tenant happens to be paying. So the file gets qualified on the more sustainable number, not the temporarily favorable one.
This surprises some investors who assume a strong lease is an asset that boosts their borrowing power. It can still help — a documented, paying tenant removes vacancy risk from the underwriting conversation — but it won’t push the rent used for lender review past what the appraisal supports.
What About Rent-Stabilized Or Regulated Units?
Where a legally registered rent applies, that figure functions as a ceiling regardless of what the lease states or what the tenant actually pays. If the tenant is paying above the legal rent, the registered figure is used. If they’re paying below it, the actual payment stands. This is a narrower edge case, but it matters in jurisdictions where rent regulation exists — the market-rent-versus-lease comparison described above gets replaced with a market-rent-versus-legal-ceiling comparison instead.
How This Plays Out On A Sample File
Picture an investor buying an occupied single-family rental. The existing lease was signed well below what similar homes nearby currently rent for. The appraiser’s 1007 comes back supporting a higher market rent. But underwriting uses the lease figure — the lower of the two — because that’s what the tenant actually pays today. The file’s DSCR ends up lower than the investor expected based on today’s market, purely because of this lease-versus-appraisal mechanic.
Now flip it: the same investor buys a vacant property down the street. No lease to compare, so the appraiser’s market-rent conclusion becomes the whole story. If the comp grid supports a rent that clears roughly 1.2x coverage against the payment, that’s the number carried into underwriting — full stop, no lease to drag it down or below-market history to worry about.
Across the wholesale network, files with a documented in-place lease tend to move through review faster than vacant-property files. That’s because a second data point confirms the rent is real, instead of relying on one appraiser’s opinion alone. This pattern is worth planning around. A vacant purchase leans entirely on comp quality. So pull the appraisal order early and review the comp set before the file goes to underwriting — this can save you a reconsideration request later.
Key Terms Defined
Form 1007: the standard rent-schedule appraisal document used to document an appraiser’s opinion of monthly market rent on a single-family investment property.
Lower-of rule: the underwriting practice of qualifying a DSCR loan on whichever is lower — the signed lease amount or the appraiser’s market-rent opinion — rather than the higher of the two.
PITIA: principal, interest, taxes, insurance, and association dues — the full monthly obligation the rent used for lender review gets divided by to produce the coverage ratio.
Coverage ratio (DSCR): the rent used for program review divided by PITIA; a ratio at or above 1.00 means the rent fully covers the payment.
Operating history: documented trailing income, typically twelve months of platform statements for a short-term rental, used in place of a projection when it’s available.
What This Means For How Investors Plan A Purchase
DSCR loans mostly qualify based on the property’s rental income, not your usual personal income paperwork. This is subject to lender guidelines. But “the property’s rental income” isn’t just any number an investor thinks is possible. It’s the lower-of figure described above, or a documented/discounted short-term projection. This leads to two practical takeaways.
DSCR vs. conventional financing
Two common ways to finance an investment property in this market. They qualify you differently — here’s how investors weigh them.
Why investors choose it
- Qualifies on the property’s rental income — no personal tax returns, W-2s, or pay stubs needed to document income.
- No personal debt-to-income ceiling to clear, so existing mortgages and obligations don’t cap your borrowing the same way.
- Can be closed in an LLC, keeping the property inside a business entity.
- Built for scaling — not held to the limit on number of financed properties that conventional financing applies.
- Underwriting centers on the deal: generally qualifies when the rent covers the payment, a 1.00x coverage ratio being a common baseline (confirmed in underwriting).
- Designed specifically for investment property, including long-term and, where the program allows, short-term rentals.
Where it’s strong
- Often the lowest ongoing financing cost for a buyer who fully qualifies on personal income — a fit for a first property or a cost-first purchase.
Trade-offs for investors
- Requires full personal income documentation and must fit within a debt-to-income limit — salary, existing debts, and other mortgages all count.
- Typically held in your personal name rather than a business entity.
- Caps how many financed properties you can carry, which can become a ceiling as a portfolio grows.
- Evaluates you as a borrower as much as the property, which usually means more paperwork.
How investors usually choose: a first or single property often optimizes for the lowest financing cost; portfolio builders often optimize for leverage, vesting in an LLC, and scaling past conventional caps. The right answer depends on your goals, the property, and current guidelines — both paths run through select lenders in Lendmire’s wholesale network, with eligibility and terms confirmed in underwriting.
First, a below-market lease signed just to fill a vacancy can suppress the ratio even though the property’s true earning power is higher. An investor deciding between a quick lease-up and a slightly longer vacancy to land a market-rate tenant should think through how that choice flows into the file, not just the calendar.
Second, first-time short-term rental buyers with no booking history should expect the coverage figure to rely on a discounted, third-party market-data projection instead of a full-value estimate. That haircut is standard across most programs Lendmire places files with. It changes the leverage you can achieve before the conversation even reaches loan terms.
Want a fuller picture of how DSCR eligibility review works from start to finish? Lendmire’s complete DSCR loans guide covers the underwriting mechanics in more depth. The luxury short-term rental piece on how a lender handles two appraisals is useful too, especially for investors weighing a larger STR purchase.
Where This Fits Into Loan Size And Leverage
Across select lenders in Lendmire’s wholesale network, DSCR loans run from $150,000 to $3,000,000 on the standard program, with a portfolio-investor ladder extending to $10,000,000 for qualified files. Short-term-rental and no-ratio files are capped at $2,000,000. Leverage steps down as loan size climbs: typically up to 80% on purchases to $1,000,000, stepping to 75% through $3,000,000, then down further above that on a case-by-case basis, subject to underwriting. Coverage at 1.00 or better earns full leverage on most files; ratios between roughly 0.75 and 0.99, and no-ratio qualification, are real paths through select programs up to $2,000,000, though LTV and terms adjust accordingly, subject to underwriting.
Credit floors typically sit around 660 on most files, rising to roughly 700 above $3,000,000, with six months of PITIA reserves on the subject property expected on most files. Files above $2,000,000 typically require two appraisals rather than one — which matters directly for this topic, since a second independent rent opinion adds another data point to the lower-of comparison on larger files. Interest-only structures are available up to 120 months on many programs, qualified on ITIA rather than full PITIA, which can meaningfully change the coverage math on a marginal file.
DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage.
Frequently Asked Questions
Can I use my own rent projection instead of the lease or appraisal?
No. Underwriting relies on the signed lease and the appraiser’s independent market-rent opinion, not an investor’s spreadsheet or an online rent estimate. Those two figures — lease and appraisal — are compared and the lower one drives the lender’s review, subject to lender guidelines.
What happens if my lease is higher than the appraised rent?
Most files cap the rent used for financing review at the appraiser’s conclusion, even when the lease is higher. The appraisal represents a sustainable, comp-supported figure, while the current lease might reflect a temporary premium that won’t necessarily repeat with the next tenant.
Does a vacant property automatically hurt my DSCR application?
Not automatically. A vacant property is common in DSCR files, and the appraiser’s market-rent opinion stands alone as the qualifying figure when there’s no lease to compare it against. The comp quality in that appraisal becomes the deciding factor, so reviewing it early is worth the effort.
How is short-term rental income different from a regular lease?
It runs through a separate documentation path entirely — either twelve months of platform operating history on a refinance, or a discounted market-data projection on a purchase, typically applied at roughly 80% of gross income. A standard rent-schedule form isn’t used because nightly-rate math doesn’t translate directly into monthly lease income, per Fannie Mae’s guidance summarized by McKissock.
Can I mix long-term leased units and short-term rental units in the same portfolio loan?
Each property’s income typically gets qualified through its own appropriate method — leased units through the lease-versus-appraisal comparison, short-term units through the operating-history-or-projection path — before the portfolio’s overall coverage is assessed. Lendmire’s piece on long-term lease versus short-term rental income across a portfolio covers how that mixed-income math typically gets handled.
If you are buying or refinancing a rental property and want to see how the numbers work, Lendmire can help you compare DSCR loan options based on the property income, credit profile, leverage, and investor goals. Investors can reach Lendmire at 828-256-2183 to talk through a specific file.
For current guidelines and terms, see Lendmire’s super jumbo DSCR loan programs page.
Self-employed borrowers can compare both super jumbo programs on Lendmire’s self-employed mortgages page.
About Lendmire
Lendmire is a non-QM mortgage brokerage (NMLS# 2371349) arranging DSCR investor loans in 40 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR loans are evaluated by the lender on rental income rather than personal income, subject to lender guidelines — a fit for LLC-owned portfolios, self-employed investors, and operators scaling beyond conventional loan caps. Recognized as a Scotsman Guide Top Mortgage Workplace in 2025 and 2026.
Lendmire’s Top Mortgage Workplace recognition is documented by Scotsman Guide 2025 Top Mortgage Workplace and Scotsman Guide 2026 Top Mortgage Workplace.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your home or investment property. No commitment required.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. Freddie Mac/Fannie Mae Form 1007/1000 official form text
2. Fannie Mae Form 1007 official form page
3. McKissock Learning — Form 1007 & Short-Term Rental Appraisals
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.
