The Quick Read: On a vacant rental, the appraiser’s rent schedule is the only rent figure a lender can count, while a signed lease only helps once a tenant is paying, and on most files the lender then counts the lower of the lease and the market-rent opinion. Your best choice depends on whether the property already has a tenant and whether the program will take a vacant cash-out at all.
- A vacant property is underwritten on the appraiser’s market-rent opinion alone.
- A lease at or below market rent is counted. A lease above market is generally capped at market.
- Some programs accept a vacant cash-out. Others want a tenant or operating history first.
- Cash-out refinances top out around 75% LTV on standard rentals, with about 6 months of ownership expected.
- Clearing 1.00 coverage does not mean the property cash flows.
Here is the honest answer. The rent schedule is for the investor whose property is empty, newly finished, or between tenants and who wants cash out without waiting on a lease. The signed lease is for the investor whose tenant is already paying, or who can sign a market-rate tenant before the appraisal. Neither is better in the abstract. They answer different questions: what could this property rent for, and what is it actually renting for.
DSCR Cash-Out Calculator
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Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Oct 29, 2026
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Program parameters update from Lendmire’s centralized guideline source. Taxes and insurance are editable estimates.
As of Oct 29, 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.
Side-by-Side
This table compares the two income sources as they work on DSCR cash-out files, based on published industry norms and how files typically run across Lendmire’s wholesale network. Program details vary by lender and file.
| Factor | Rent schedule (vacant) | Signed lease |
|---|---|---|
| Review basis | Appraiser’s market-rent opinion | Contract rent, capped at market |
| Who produces it | Appraiser, attached to the appraisal | Borrower and tenant |
| Documentation | Appraisal with schedule attached | Executed lease, payment proof, deposit record |
| Property availability | Vacant or occupied | Occupied only |
| Property types | 1 unit: Form 1007. 2-4 units: Form 1025 | Any occupied rental |
| Entity vesting | Individual or LLC, per program | Individual or LLC, per program |
| Reserve expectations | Same program reserves either way | Same program reserves either way |
| Main risk | Low appraisal comps shrink the cash-out | Below-market lease drags coverage down |
Notice the reserve row. Reserves follow the loan size, leverage, and transaction, not the income document. Across the network they are commonly around 6 months of PITIA (principal, interest, taxes, insurance, and any HOA dues), and they step up to about 9 months on loans above $1,500,000.
Entity vesting works the same way. Holding title in an LLC is common on investor files, subject to lender program eligibility. A vacant property does not change that.
How Each Document Actually Works
The rent schedule is a one-to-two page attachment to the appraisal. The Freddie Mac and Fannie Mae rent schedule form is the standard single-family version, and its own instructions say the lender uses it to get a market-rent opinion from the appraiser. Two- to four-unit properties typically use the Form 1025 variant instead.
The appraiser does not guess. According to TrueCap’s guide to investment property appraisals, the appraiser typically pulls about three nearby rental comparables and gives an opinion of the subject’s market rent. Those comps are adjusted for size, bedroom count, condition, and location. Your property’s finish level and the quality of nearby listings drive the number.
A signed lease is simpler. It shows what a tenant agreed to pay. Lenders want the executed lease, plus proof the money moves: first month’s rent and security deposit, usually through bank records.
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.
One brief contrast with agency rules: Fannie Mae’s Appraiser Update says Form 1007 is required only when rental income is used to qualify a one-unit investment property. DSCR programs borrow the form for convenience. They are governed by each program’s own guidelines, not by agency selling rules.
When the Rent Schedule Is the Better Fit
The rent schedule fits when the property is empty and you do not want to rush a tenant to satisfy paperwork. Picture an investor who just finished a renovation on a duplex. The unit is rent-ready, listed, and not yet leased. A lender can still underwrite the appraiser’s market rent against the new payment.
It also fits in these situations:
- Between tenants. The last lease ended and the next one is not signed.
- A below-market lease you cannot fix. If the sitting tenant pays well under market and renewal is not an option, a vacant file avoids the lower-of test dragging coverage down. That only works if the property is truly vacant.
- Converting from personal use. A home you lived in or held vacant can move to a rental file on market rent.
- A strong comp set. If nearby rentals support a healthy number, the schedule gives you that number without a tenant in place.
The schedule also removes one document risk. You do not need payment history, deposit records, or a tenant who cooperates with verification.
The cost is that one appraiser’s opinion becomes your entire income case. If the comps come in thin or the property shows deferred work, the schedule drops. The cash-out amount and the leverage tier drop with it, subject to program rules.
There is a bigger catch for cash-out. Vacant purchases are widely accepted. Vacant cash-outs are not accepted equally everywhere. Some programs in the network will review a vacant cash-out on the appraiser’s rent. Others want a tenant in place or some operating history first. Ask which camp your program falls in before you order the appraisal.
When a Signed Lease Is the Better Fit
A signed lease fits when a tenant is already paying a market-level rent or when you can sign one before the appraisal. It gives the underwriter a contract and a payment trail instead of an opinion. That reads as lower risk, and programs that prefer occupancy tend to like it.
The lease helps most in these cases:
- Programs that want a tenant for cash-out. If the program wants occupancy, the lease is not optional.
- A below-market lease you can renew at market. Renewing before the appraisal is a common fix. Lenders count the lease, so the lease rent should match what the property earns.
- Stable, documented income. Twelve months of on-time deposits make the file easy to read.
Here is the part that surprises people. A lease above market rent adds nothing. Most programs cap the counted rent at the appraiser’s market figure, so a generous lease does not raise your ratio. A lease below market rent does hurt, because the lower figure is the one counted.
Rushed leases cause their own trouble. A lease signed the week before the appraisal, with no payment proof, can draw questions. Month-to-month and expired leases are often underwritten on market rent instead, with a written agreement and payment evidence supporting it. Lendmire’s piece Signed Leases vs Market Rent for a DSCR Cash-Out on a Triplex works through a multiunit version of this choice, and a related article covers how a newly signed lease compares with the appraiser’s rent schedule.
A Worked Example: One Property, Three Rent Sources
Run the numbers on a single rent-ready property. These coverage ratios are modeled assumptions for illustration, not market data. Suppose the cash-out loan sits at 75% LTV on a standard rental and carries a full PITIA. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
- Vacant, schedule only. The appraiser’s market rent produces coverage of about 1.15x.
- Leased at market. The lease matches the schedule, so coverage is also about 1.15x.
- Leased below market. The lender counts the lower lease figure, and coverage slips to about 1.02x.
- Leased above market. The lender caps it at market, and coverage stays about 1.15x.
The takeaway is plain. A lease never beats the schedule on ratio. It can only match it or pull it down. What a lease buys you is documentation, and that can matter for programs that want a tenant.
Now consider what happens near the floor. Across the network, 1.00 is where many select programs start. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. A file at 1.02x leaves almost no cushion if the comps move, so run any estimate as a range. The counted rent can shift once the appraisal lands.
What a Vacant Cash-Out Looks Like in Practice
Most cash-out files on standard rentals top out around 75% LTV. Short-term-rental collateral generally tops out at 70% on a cash-out, and those files expect a 640+ score and about 12 months of hosting history. About 6 months of ownership, measured from title recording, is the common seasoning expectation for a cash-out.
Credit still matters. A 620 floor exists in parts of the network, most programs want around 660, and 700+ unlocks the strongest leverage tiers. Standard loan sizes run up to $3,000,000, subject to lender guidelines.
The cash you can take out is not a fixed figure. It depends on the counted rent, the new PITIA, reserves, and the 75% ceiling. A cash-out label does not guarantee cash. A low rent opinion can leave little or nothing to take.
For a vacant file, expect to assemble:
1. The appraisal with the rent schedule attached. Have utilities on and the property accessible for the appraiser.
2. A vacancy explanation. A short letter saying why it is empty, such as a renovation just finished or a tenant who recently moved out.
3. Evidence it is rent-ready. Photos, a completed repair list, and any certificate of occupancy where one applies.
4. Proof you are marketing it. A listing, or a management agreement in place.
5. Insurance and the usual credit and entity documents. DSCR loans qualify primarily on property-level rental income covering the payment, subject to lender guidelines. They still require an appraisal, credit, and insurance.
Short-term rentals are a separate lane. The rent schedule form uses monthly-lease comparables and cannot estimate a nightly rate, as the Appraiser Update above notes. Those files run on platform history or a market-data report instead. Short-term rental rules can vary by city, county, HOA, and property type, so investors should confirm local rules before relying on projected rental income.
Property type matters too. Manufactured homes, log homes, and barndominiums are not offered in the network’s DSCR programs, with or without a lease.
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 Rent Schedule Comes in Low
A low rent opinion is the most common way a vacant cash-out gets smaller. You have four realistic options.
Wait and re-run. If comps were thin or the property showed small cosmetic issues, fix them and request a fresh look. This works when the gap comes from condition rather than the market.
Lease it at market, then refinance. Putting a tenant in place builds a payment record. If the program wanted occupancy anyway, this converts a hard file into a normal one, though it may push you past the ownership seasoning period.
Take less cash. A lower loan amount lowers the payment and lifts coverage. A bigger down payment or smaller cash-out helps the ratio, but it never erases leverage caps, credit floors, reserve rules, or property eligibility.
Use a different structure. Sub-1.00 coverage is available through select lenders in the network, with leverage and terms adjusted. Extended terms and interest-only periods are available through select lenders as well. Qualification is subject to lender guidelines, credit approval, and property review.
If the property is not rent-ready at all, a short-term bridge loan to finish the work, then a refinance once it is stable, is a common path. A DSCR cash-out is a stabilized-property product.
One last caution. DSCR compares rent to PITIA only. Clearing 1.00 does not mean the property cash flows, because repairs, vacancy, management, utilities, and capital expenses sit outside the calculation. Budget those separately, especially on a vacant property.
Key Terms Defined
Rent schedule: The appraiser’s opinion of monthly market rent, built from comparable rentals and attached to the appraisal.
Signed lease: A contract showing the rent a tenant has actually agreed to pay.
PITIA: Principal, interest, taxes, insurance, and any association dues, which together form the monthly obligation the rent is measured against.
DSCR: The debt service coverage ratio, which divides qualifying monthly rent by PITIA.
Seasoning: The ownership period a lender wants before a cash-out refinance.
Cash-out refinance: A refinance that returns cash at closing, sized by the new loan against the property’s value.
The Verdict
Choose the rent schedule if the property is vacant, rent-ready, and sits in a market with strong comps, and the program you are using reviews vacant cash-outs. Choose the signed lease if a tenant is already paying at or near market, or if your program wants occupancy for cash-out.
The strongest files clear both tests: enough equity and enough rental coverage. A lease never raises your counted rent above market, so its real value is documentation. The schedule’s real value is flexibility. Pick based on where the property stands today and which program you are working with, not on which document sounds more solid.
Frequently Asked Questions
Do I need a signed lease for a vacant DSCR cash-out?
Not always. Some programs in the network will underwrite a vacant property on the appraiser’s market rent, while others want a tenant or operating history before a cash-out. Ask which camp your program falls into before ordering an appraisal. Eligibility depends on the lender, the file, and the property.
Does a lease above market raise my DSCR?
No. Most programs count the lower of the lease and the appraiser’s market rent, so an above-market lease is capped at market. A lease can still help if it replaces a below-market rent or satisfies a tenant requirement.
Which form does the appraiser use for a duplex?
Two- to four-unit properties typically use Form 1025 rather than the single-family Form 1007. The purpose is the same: an opinion of market rent from comparable rentals, attached to the appraisal.
Does the rent schedule work for an Airbnb?
Not by itself. The form uses monthly-lease comparables and cannot estimate a nightly rate. Short-term-rental files generally rely on platform history or a market-data report, and cash-out on that collateral tops out at 70% LTV.
Should I sign a tenant before the appraisal?
Only if the lease is at a market rent and you can document the payments. A below-market lease lowers the counted rent, and an above-market one gains nothing. Talk through timing with your broker before you sign.
Next Step
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. The brokerage arranges investor financing through select lenders in its wholesale network, across 41 markets including Washington, D.C. Approval is not a commitment to lend. For the full picture of how these loans work, see the complete DSCR loans guide.
Whether you lean on the schedule or the lease, a vacant property gets underwritten on what the appraiser can prove it will rent for, so build your numbers around that figure before you plan the cash-out.
A deeper walk-through of investment-property equity extraction lives in Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
Lendmire, NMLS# 2371349, is a non-QM mortgage broker serving real estate investors in 41 markets, including Washington, D.C., through DSCR investor loan programs. Qualification is generally reviewed around the subject property’s rental income, not the borrower’s W-2 history — a practical fit for LLC-titled portfolios and self-employed investors. All scenarios remain subject to lender review and program guidelines. Two consecutive Scotsman Guide Top Mortgage Workplace recognitions (2025, 2026).
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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 Form 1000 / Fannie Mae Form 1007, Single-Family Comparable Rent Schedule
2. TrueCap: Investment Property Appraisals
3. Fannie Mae Appraiser Update
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: DSCR Cash-Out Seasoning vs. a Hard Money Bridge for an LLC Rental · Can a Logan Ohio Rental Get a DSCR Loan Without a Lease? · How to Close a DSCR Cash-Out Refinance on a Rental in a Trust
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.