The Quick Read: Usually not: a vacant building has no in-place rent for a lender to test, so most DSCR cash-out refinances on five-to-ten unit buildings wait until the property is leased or mostly leased, and a larger building adds commercial-style appraisal and underwriting that makes the wait stricter than on a one-to-four unit. Partly vacant buildings are a different conversation. Some lenders tolerate a unit or two that is truly ready to rent.
- Cash-out is a leased-building tool. The loan is tested on rent, so lease the building first, then apply.
- Cash-out tops out around 75% LTV on standard rentals across most of the network, with about 6 months of ownership (seasoning) as the common expectation.
- Five units is the dividing line. One-to-four units are treated as residential. Five and up are treated as commercial for financing.
- Partial vacancy is program-specific. Whether empty units count at market rent, count at zero, or reduce your leverage differs by lender.
- A vacant purchase is easier than a vacant cash-out. Lenders generally allow a turnkey vacant building on a purchase because there is no refinance history to test.
Why Vacancy Is the Problem on a Cash-Out
A DSCR loan qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. DSCR stands for debt service coverage ratio. You divide the property’s monthly rent by its monthly payment (principal, interest, taxes, insurance, and any HOA dues, together called PITIA). A building with no tenants has nothing real to put in the top of that fraction.
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 8, 2026
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As of Oct 8, 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.
On a purchase, lenders can accept that. The buyer is acquiring a building, and a turnkey vacant property can be underwritten on the appraiser’s market-rent opinion. A cash-out refinance asks for more. The lender is handing you equity against a building that has not yet shown it can earn. So the refinance side of the market generally wants leases or an operating history, and many lenders attach a lease condition even to loans that are advertised as vacant-friendly.
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.
What Counts as “Vacant” to a Lender?
Vacant is not one condition. Lenders sort it into several situations, and each one gets a different answer. This table shows how files like this typically sort across the network, though each lender sets its own line.
| Situation | What the lender looks at | Typical next step |
|---|---|---|
| Fully empty, rent-ready | Market rent only, no leases | Lease it, then apply |
| Fully empty, under renovation | Finished work plus leases | Bridge or cash, finish, lease, refinance |
| Between tenants, short gap | Prior lease history, new leases | Sign leases before applying |
| One or two rent-ready units empty | Occupied-unit rent, vacancy treatment | Program-specific; ask in writing |
| Mostly empty | Occupancy and in-place income | Treat as lease-up, not cash-out |
The pattern is simple. The more of the building that is earning, the more options you have. The more of it is a plan instead of a rent roll, the more likely the lender asks you to come back after it is leased.
Why Five-to-Ten Units Is Harder Than a Fourplex
In financing, one-to-four units is the residential lane. Five and up is commercial. That line changes the appraisal, the underwriting, and often the loan terms.
On one-to-four units, appraisers use forms built for the job. The Small Residential Income Property Appraisal Report (Form 1025) carries a unit-by-unit rent schedule. A legal glossary entry on Form 1025 notes the form covers small buildings, not five or more units. For single-family homes, the rent schedule is Form 1007, which McKissock’s appraisal-education blog explains documents monthly rent on single-family homes.
That matters here for one reason. On a vacant one-to-four unit, the appraiser’s market-rent opinion can sometimes stand in for a lease. That flexibility does not carry over well to five-plus units. Larger buildings generally get a commercial-style, income-approach appraisal, which costs more and looks harder at the building’s actual financials.
Underwriting shifts too. Larger buildings are often tested on net operating income against total debt service, not the simple rent-over-payment math used on a duplex. Expect a rent roll, copies of the leases, operating statements, entity documents, and an appraisal. For a vacant building, none of those income documents exist yet.
Bank-style commercial loans on larger buildings also tend to come with shorter fixed periods, balloon payments, and prepayment penalties. Within Lendmire’s network, the spine of DSCR lending is the 30-year fixed, with extended terms, interest-only periods, and ARMs available through select lenders. Whether a given five-to-ten unit building fits a program, and on which structure, is a lender-by-lender call. Treat anyone who tells you it is automatic with suspicion.
Personal financials still matter on larger deals, too. Borrower experience and the building’s own numbers tend to carry more weight as the unit count climbs.
The Numbers a Cash-Out Still Has to Clear
Occupancy does not replace the standard tests. It sits on top of them. These are typical ranges across select wholesale-network programs, subject to lender guidelines.
- Leverage: cash-out refinances top out around 75% LTV on standard rentals, and short-term-rental collateral caps lower, around 70%. LTV is the loan balance divided by the property’s appraised value.
- Seasoning: about 6 months of ownership, measured from title recording, is the common expectation.
- Coverage: 1.00 is where many select programs start. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Stronger ratios open better pricing and leverage.
- Credit: a 620 floor exists in parts of the network, most programs want around 660, and 700 or higher opens the strongest leverage tiers.
- Reserves: commonly around 6 months of PITIA, stepping up to about 9 months on loans above $1,500,000.
- Loan size: up to $3,000,000 on standard programs.
The cash you actually walk away with depends on rent used for lender review, the payment, reserves, and that 75% ceiling. It is not a fixed figure, and the calculator on the site is an illustrative estimate only.
If you are still weighing the basics, Lendmire’s complete DSCR loans guide walks through how these programs are built.
A Worked Example: Eight Units, Two Empty
Run the numbers on a hypothetical eight-unit building, using modeled assumptions rather than market data. Six units are leased and two are rent-ready but empty. Say the six leased units alone give a coverage ratio around 1.05x against the full payment. If a lender counts the two empty units at the appraiser’s market rent, coverage might rise toward 1.25x. If the lender counts them at zero, you stay near 1.05x. And if the lender haircuts leverage because of the vacancy, the loan amount shrinks even though the ratio looks fine.
Same building, three different answers. That is why you ask each lender how it treats vacant units before you pay for an appraisal.
Now flip it. Picture the same building with only three of eight units leased. Coverage on in-place rent may sit well under 1.00x. Some lenders will not look at it as a cash-out at all, and it reads as a lease-up. A select-lender path exists for coverage below 1.00, with leverage and terms adjusted, but with most of the building empty you are asking the lender to underwrite a plan instead of a rent roll.
One thing deserves a plain warning. DSCR compares rent to PITIA only. Clearing 1.00x does not mean the building cash flows. Repairs, vacancy, management, utilities, and capital expenses all sit outside the calculation. A building that passes can still lose money.
What to Submit on a Partly Vacant File
A clean package answers the underwriter’s first question, which is why the building is empty. Gather these before you apply:
1. A current rent roll listing every unit, its status, and its rent.
2. Signed leases for the occupied units.
3. A short written explanation of each vacancy, such as turnover, renovation finished, or a lease expiring.
4. Photos or inspection proof that empty units are rent-ready.
5. Evidence that utilities and insurance are active on the vacant units.
6. Entity documents if the building sits in an LLC, subject to lender program eligibility.
Lenders ask about vacancy because an empty building can mean deferred repairs, a weak local rental market, or a borrower still mid-project. An honest, documented answer protects the file. A vague one invites conditions.
If the Cash-Out Doesn’t Work Yet
Your options usually fall into a few paths. Which one fits depends on how empty the building is and what you need the money for.
| Option | When it fits |
|---|---|
| Lease up first, then refinance | Building is rent-ready, you can wait |
| Smaller cash-out | Occupied rent supports less leverage |
| Payoff-only refinance | You need better terms, not cash |
| Short-term bridge, then takeout | Renovation is still underway |
| Different lender or program | Your current lender treats vacancy strictly |
The usual path on a building mid-renovation or between tenants is to finish the work, lease it, and refinance after. Schedule lease-up before the application, not after. The same logic applies on smaller buildings, which Lendmire covers in its piece Can You Cash-Out Refinance a Vacant 2–4 Unit Rental Property?.
Leasing a building out does not reset your seasoning. Ownership measured from title recording is a separate clock. Many investors wait for both clocks to run before applying.
Keep soft costs in view. A commercial-style appraisal costs more than a residential one, and that trims the net proceeds of a modest cash-out. A small draw on a large building may not be worth the expense.
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.
Short-Term and Mid-Term Rentals Work Differently
If the building has been running as a short-term or mid-term rental, an operating history can stand in for a lease. For short-term rentals, expect a 640 or higher credit score and about 12 months of hosting history. Cash-out on short-term-rental collateral caps around 70%, compared with 75% on standard rentals. Form 1007 is a long-term rent tool, and McKissock notes it is not designed for short-term-rental income, so the income support comes from your actual booking records. Short-term rental rules can vary by city, county, HOA, and property type, so confirm local rules before relying on projected rental income.
Common Misconceptions
“DSCR loans never need a lease.” That is true mainly on purchases. Refinances generally want leases or an operating history, and lease conditions can appear even on loans marketed as vacant-friendly.
“A five-unit is just a bigger fourplex.” It is not. Five units is the commercial line, with different appraisal, underwriting, and terms.
“No personal income documents means no scrutiny.” Qualification runs on the property’s income, but borrower experience and personal financials still weigh in on larger buildings.
“The appraisal forms cover any building.” Forms 1007 and 1025 apply to one-to-four units only.
“Market rent is whatever I say it is.” The appraiser sets it, and comparable rents can come in below your target. Tax treatment varies; consult a qualified professional.
Key Terms Defined
DSCR (debt service coverage ratio): monthly rent divided by the full monthly payment on the property.
PITIA: principal, interest, taxes, insurance, and any association dues, which together make up the payment the ratio tests.
LTV (loan-to-value): the loan balance as a percentage of the property’s appraised value.
Seasoning: the waiting period between buying a property and refinancing it, measured here from title recording.
Rent roll: a unit-by-unit list of tenants, rents, and lease dates.
Cash-out refinance: a new loan larger than your current balance, with the difference paid to you.
Frequently Asked Questions
Can I cash out a completely empty five-to-ten unit building?
Rarely. With no in-place rent and no operating history, most lenders treat an empty building as a lease-up, not a cash-out. If it is empty because of a renovation, finishing and leasing it first is the usual path. A purchase is a different story, since turnkey vacant buildings are generally allowed there.
What if only one or two units are vacant?
It can work, but it is program-specific. Some lenders accept one or two rent-ready empty units on a multifamily refinance. They may count those units at market rent, at zero, or trim your leverage. Ask each lender in writing how vacant units are treated before you order an appraisal.
Do I need a lease for every unit?
Not always, but you should expect the occupied units to be documented with leases and a rent roll. For empty units, an appraiser’s market-rent opinion may support the file where the program allows it. On five-plus units, that flexibility is thinner than on a fourplex.
Can I cash out right after buying the building?
Not on most files. The common expectation is about 6 months of seasoning, measured from title recording, before a cash-out. Selecting a program with the right seasoning rule matters more than the building’s occupancy at that point.
Is a vacant cash-out different if the building is a short-term rental?
Yes. Operating history can support the file in place of a lease. Expect about 12 months of hosting history, a 640 or higher score, and leverage capped around 70% on cash-out for short-term-rental collateral. Local short-term rental rules still apply to the property.
About Lendmire
Lendmire (NMLS# 2371349) is a DSCR-focused mortgage broker arranging investor financing through select lenders in its wholesale network, across 41 markets including Washington, D.C. It places files with lenders. Eligibility, approval, and terms rest with the lender and are subject to lender guidelines. This is not a commitment to lend. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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. You can reach the team at 828-256-2183 or request a quote.
The investors who get the most out of a cash-out on a larger building are the ones who treat lease-up as step one and the application as step two.
For how equity extraction works on an investment property, see Lendmire’s guide to cash-out refinance on an investment property.
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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. Fannie Mae/Freddie Mac Form 1025/72
2. Barnes Walker legal glossary, Form 1025
3. McKissock, Form 1007 and short-term rental appraisals
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: Second-Lien HELOC vs Cash-Out Refinance for a Low Fixed Mortgage · Should a Standby HELOC Replace a 401(k) Loan for Emergencies? · HELOC on a Primary Home for a Rental: When-Yes and When-No Criteria
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.