The Quick Read: Usually yes, because DSCR underwriting needs a defensible rent number for each unit, not a signed lease, and on a fourplex an appraiser supplies that number. Whether it works on your file depends on the program and on how each unit is occupied. Select lenders in the network will underwrite a vacant, rent-ready unit on appraised market rent, while others want a signed lease before a cash-out closes.
- Cash-out on a fourplex tops out around 75% LTV on a standard rental, with about 6 months of ownership seasoning.
- The appraiser’s rent schedule can stand in for a missing lease, but it can also lower your number.
- Occupied units typically count at the lower of lease rent and market rent.
- One empty unit is often workable. Four empty units is program-specific.
- Units that need work usually mean waiting or a bridge loan.
A lease is evidence. The loan runs on the rent figure. This article walks through how that figure is built, what each “no written lease” situation does to it, and what to do before you apply.
DSCR Cash-Out Calculator
Run the cash-out numbers in your market
Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Oct 22, 2026
Prefilled with starting assumptions — enter your property’s value, balance, taxes, and insurance for a more accurate picture.
Program parameters update from Lendmire’s centralized guideline source. Taxes and insurance are editable estimates.
As of Oct 22, 2026 · General Freddie Mac market benchmark, not a Lendmire loan offer. Property value, balance, taxes, and insurance are editable estimates. Maximum loan-to-value varies by lender, program, property type, and seasoning. 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 Does a Lender Actually Need If There Is No Lease?
A lender needs a supportable monthly rent for every unit. On a fourplex, the appraisal produces that number. The appraiser uses the small-residential-income report, Form 1025, which Fannie Mae lists as the Small Residential Income Property Appraisal Report. Form 1007 is the single-family rent schedule and covers one-unit properties only, so it does not apply here.
DSCR loans are not agency products. They borrow the form names because the appraisal industry already uses them. The form itself carries a rent schedule where the appraiser supports estimated market rents with comparable rentals, as the blank Form 1025 shows.
Across the wholesale network, the pattern is consistent. The appraisal does two jobs. It sets value, which drives LTV. It also sets the rent schedule, which drives coverage. The loan amount ends up as the lower of the equity limit and the rent-coverage limit.
How Is the Coverage Number Built on a Fourplex?
Coverage is the combined rent from all four units divided by PITIA: principal, interest, taxes, insurance, and any HOA dues. Most files land on this logic. Treatment by lease status runs like this:
- Occupied units typically use the lower of the lease rent and market rent.
- Vacant units use market rent from the appraisal, if the unit is rent-ready.
- Month-to-month or expired leases are often treated like vacant units, though programs differ.
- A fixed-term lease below market caps the rent for that unit.
- A lease above market earns no extra credit.
That last point corrects a common belief. A strong lease does not raise your ratio. If you signed a tenant at a premium, the appraiser’s market figure still governs.
Cash-out also raises the loan balance. That compresses coverage compared with the same building before the refinance. Equity available depends on rent used for lender review, PITIA, reserves, and the 75% cash-out LTV ceiling on a standard rental. It is a limit, not a figure anyone is owed. Net cash is the new loan minus the payoff, costs, and reserves. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Every “No Written Lease” Situation, Side by Side
The title question hides several different situations. Each gets different treatment.
| Situation | Typical rent basis | Risk to the file |
|---|---|---|
| All four units empty, rent-ready | Appraiser’s market rent | Program-specific |
| One unit empty, three leased | Market rent on the empty unit | Often workable |
| Month-to-month tenant | Often market rent | Varies by program |
| Expired lease, tenant still there | Often market rent | Varies by program |
| Verbal-only tenant | Market rent if allowed | Needs payment proof |
| Below-market tenant | Market rent if lease is not required | Helps the file |
| Units needing work | Condition becomes the issue | Often bridge candidate |
Two cautions sit under this table. First, a verbal-only arrangement or a tenant paying in cash is hard to document. Bank deposits, a rent ledger, and deposit receipts help show that the unit is rented and who lives there. Second, any unit occupied by the owner or a family member breaks the non-owner-occupied requirement. Nobody in the borrower’s family or entity may live in any unit of a 2-4 unit building for a DSCR loan. If your “tenant with no lease” is a relative, the product itself changes.
Treat the table as a map, not a promise. Select lenders in the network differ, and each file is underwritten individually, subject to lender guidelines.
Why Month-to-Month Tenants Can Help You
Month-to-month tenants paying below market can improve the file in programs that replace the lease with market rent. The cap that a below-market lease would impose falls away. That is the one place where having no formal lease is an advantage.
The reverse also holds. Say you renewed a long-term tenant at a discount last spring. If the program counts the lower of lease and market rent, that renewal shrinks the loan. Investors who plan to cash out soon often hold renewals until after the appraisal, where that makes sense for the property.
Refinance Versus Purchase on Leasing
Purchases are generally looser than refinances on this question. Some programs underwrite a vacant, rent-ready property on a purchase but want a signed lease before a cash-out refinance. Others treat both the same way.
This is where files get kicked back. An investor assumes the lease-free purchase treatment carries over to the refinance. It does not always. Ask the broker which treatment a program uses before the appraisal is ordered, not after. The appraisal fee is spent either way.
Compare this with government-backed lending. FHA guidelines have their own rule for 2-4 units with limited or no rental history: an appraisal showing fair market rent, plus prospective leases if available. That is an FHA rule and it does not govern DSCR loans. It shows the same idea in another setting: when the lease is missing, the appraised rent carries the file.
Stress Test: Zero, One, and Two Units Empty
Run one building three ways. The numbers below are illustrative ratios, not program terms.
Picture a fourplex that covers its payment comfortably when all four units count at market rent. Call it low-1.3 territory. Now one unit goes empty and the program counts market rent on that unit. The ratio barely moves. If the program instead counts only leased units, the ratio drops sharply, and with two empty units it can fall below 1.00.
That swing is the whole story. Treatment of the vacant unit matters more than the vacancy itself. Programs with a floor of 1.00 are common among select programs, and stronger ratios open better pricing and leverage. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Neither path is automatic, and qualification stays subject to credit approval and property review.
Vacant units also shift risk onto the appraiser’s comps. No lease backstops a low rent opinion. If the appraiser comes in light, the number can only be challenged through a second appraisal or a formal reconsideration with recent comparable rentals.
What Other Gates Still Apply?
Dropping the lease does not drop the rest of the file. On most files in the network:
- Seasoning: about 6 months of ownership, measured from title recording, before cash-out.
- Credit: a 620 floor exists in parts of the network. Most programs want around 660, and 700+ unlocks the strongest leverage tiers.
- Reserves: commonly around 6 months of PITIA, stepping up to about 9 months on loans above $1,500,000. Reserves vary by lender, leverage, and loan size.
- Loan size: up to $3,000,000 on standard programs.
- Entity documents: if the fourplex sits in an LLC, the operating agreement and related papers are reviewed, subject to program terms.
- Title and insurance: clearing title and a complete insurance quote are still on the list.
A fourplex stays in residential underwriting. Commercial NOI underwriting generally starts at five units, so a fourplex does not need commercial financing. Short-term rentals are decided separately, since the appraisal form does not capture nightly income.
The appraisal form also asks whether the property is subject to rent control, as Form 1025 shows. Rent-controlled units can cap the market rent the appraiser supports.
Documentation Playbook: What to Do Before You Apply
Order matters. Work through this sequence.
1. Confirm occupancy. Every unit is a true tenant unit. No owner or family use.
2. Confirm the legal unit count. The appraiser needs four rentable units that match records.
3. Get units rent-ready. Vacant units need to be habitable and finished. Units needing work are the usual bridge-loan candidates.
4. Assemble rent evidence. Leases where they exist. For informal tenants, bank deposits, a rent ledger, and deposit receipts.
5. Decide on renewals. Think about timing before the appraisal, since a discounted renewal can cap the rent.
6. Gather entity papers, insurance quotes, and reserves statements.
7. Ask the broker which lease treatment the program uses on a refinance, then order the appraisal.
An investor with three leased units and one freshly renovated empty unit has a very different file from one with a building empty after a rehab. The first usually moves cleanly. The second is program-specific.
DSCR vs. conventional financing
There are two common ways to finance an investment property, and 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.
If the Numbers Don’t Work
If coverage or leverage falls short, there are a handful of moves:
- Lower the cash-out amount.
- Lease up the empty units and reapply.
- Raise rents at renewal to market, where the property supports it.
- Wait for seasoning to run.
- Use a bridge loan for units needing work, then exit into a DSCR loan.
- Ask about select lenders with adjusted leverage and terms for lower coverage.
Coverage Is Not Cash Flow
Clearing 1.00 does not mean the building cash flows. DSCR compares rent to PITIA only. Repairs, vacancy, management, utilities, and capex sit outside the calculation. A fourplex that passes the test can still lose money in a bad month, and a lender sizing the loan on appraised rent has not underwritten your operating costs. Size the cash-out to what the building can carry, not to the maximum.
Key Terms Defined
DSCR: Monthly rent divided by the monthly housing obligation on the loan.
Market rent: The rent an appraiser supports for a unit using comparable rentals.
PITIA: Principal, interest, taxes, insurance, and any HOA dues.
Rent roll: A list of units, tenants, and rents.
Seasoning: The period you must own a property before cash-out is available.
Rent-ready: A unit finished and habitable enough to rent today.
For the full program picture, see Lendmire’s complete DSCR loans guide. Investors who also live in one unit of a fourplex will find a different product in Lendmire’s piece VA Cash-Out Requirements for a Fourplex You Live In.
Frequently Asked Questions
Do I need a lease if the whole building is empty?
Not always. Select lenders in the network underwrite an empty, rent-ready fourplex on the appraiser’s market rent. Others want signed leases before a cash-out closes. It is program-specific, so confirm before ordering the appraisal.
Can a month-to-month tenant count toward my coverage?
Often yes. Many programs treat month-to-month or expired leases like vacant units and use market rent. A tenant paying below market can actually help, because the lease cap drops away. Programs differ, so ask first.
Can I cash out with one empty unit?
Often. One empty unit among leased units is commonly workable, with market rent applied to the vacant unit. Some treatments count only leased units, which can pull coverage down sharply. Ask which approach the program takes.
Does a verbal agreement or cash rent count?
It can, but it is harder to document. Bank deposits, a rent ledger, and deposit receipts help show the unit is occupied and who lives there. Any unit used by the owner or a family member breaks the non-owner-occupied rule.
What is the maximum cash-out on a fourplex?
About 75% LTV on a standard rental, and short-term rental collateral typically sits lower. That is a ceiling. Net cash is the loan minus payoff, costs, and reserves, and coverage can limit the amount further. Qualification is subject to lender guidelines.
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. Tax treatment varies; consult a qualified professional.
Investors weighing their equity options can start with Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
Lendmire (NMLS# 2371349), a non-QM mortgage broker serving investors in 41 markets including Washington, D.C., helps structure DSCR scenarios commonly evaluated around a property’s rental income rather than personal income paperwork, subject to lender guidelines. A Scotsman Guide Top Mortgage Workplace in 2025 and 2026, Lendmire places loans through wholesale investor lenders and is not a direct lender.
Get Started
Ready to find the right loan for you?
See your offer in seconds. No credit pull, no obligation.
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. Fannie Mae Selling & Servicing Guide Forms
This article is part of Lendmire’s investment property cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can an LLC Rental With a Balloon Loan Get a Cash-Out Refinance? · Does a Duplex or Fourplex Rental Qualify for a Cash-Out Refinance? · Can an LLC Take Out a Cash-Out Refinance on Its Rental?
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
Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.