The Quick Read: On a vacant property there is no lease, so the lender takes its rent figure from the appraiser’s rent schedule, a third-party opinion of what the property should rent for. That market rent is divided by the full monthly housing payment to produce the coverage ratio. The ratio then sets whether the file works and how much leverage it can carry.
- The appraiser’s market-rent opinion is usually the only rent evidence in a vacant file.
- Rent-ready condition matters as much as the number itself.
- Coverage compares rent to the housing payment only, not to repairs, vacancy, or management.
- A weak rent opinion can mean a smaller loan, adjusted terms, or a different program.
- Your own estimate and online rent tools do not replace the schedule.
Most investors assume an empty building is a problem. Usually it isn’t. A vacant, rent-ready purchase is routine, and the rent schedule is the document that makes it work. Here is how the mechanics run, where they break, and what you can do before you sign a contract.
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Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Oct 29, 2026
Prefilled with starting assumptions — 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 Oct 29, 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.
Key Terms Defined
Rent schedule. An appraiser’s written opinion of the monthly rent a property should earn on the open market, backed by nearby rental comparisons.
Market rent. The rent a typical tenant would pay for that property today, as opposed to what an owner hopes to charge.
DSCR (debt service coverage ratio). Monthly rent divided by the monthly housing payment. A result of 1.00 means rent matches the payment.
PITIA. Principal, interest, taxes, insurance, and association dues. It is the full monthly housing payment used in the ratio.
Form 1007 and Form 1025. The appraisal forms that carry the rent opinion. Form 1007 covers a one-unit property. Form 1025 covers two to four units.
Rent-ready. A property that could be leased as it stands, with only light cosmetic work left.
What Is a Rent Schedule, and Who Produces It?
A rent schedule is an appraiser’s opinion of market rent, and the lender orders it, not you. It rides along with the appraisal as an attachment or as a section inside the report.
The form most lenders borrow is the Fannie Mae Single-Family Comparable Rent Schedule. The lender uses it to get market rent from the appraiser, and the appraiser prepares it as an attachment to the appraisal. The same form is also known as Freddie Mac Form 1000, which you can see on Freddie Mac’s copy.
One point trips people up. These are agency forms. DSCR loans are not agency loans, and agency rules do not govern them. DSCR lenders borrow the form because it is a clean, familiar way to document rent. The lender’s own program rules decide how the number gets used.
The independence matters. You cannot hand the lender your estimate and have it count. The appraiser is a third party with no stake in the deal, which is why the figure carries weight.
How Does the Appraiser Build the Number?
The appraiser picks three nearby rental comparables, adjusts them for meaningful differences, and reconciles to one indicated monthly rent. The form is built around a subject property and those three comps.
The adjustments follow the form’s own line items. They cover location, design and appeal, age and condition, room count, and gross living area. The appraiser also adjusts when utilities or furniture are included in a comp’s rent. Rent concessions, such as a free month, are adjusted to the market rather than to your property.
The form’s comments section adds context: the range of rents, estimated vacancy, and rent trends. The final figure is stated as of an effective date.
Comp quality drives the outcome. Recent, close, and similar comps produce a figure that holds up. Stale or distant comps produce one that doesn’t. With no lease to cross-check, the whole ratio rests on one comp grid.
Which Form Applies?
| Property type | Form | How rent appears |
|---|---|---|
| One-unit (single-family, condo) | Form 1007 | Separate attachment |
| Two to four units | Form 1025 | Inside the income report |
On a two-to-four-unit building, the appraiser estimates market rent for each unit separately. Whether vacant units are allowed is program-specific, so ask before you contract.
How Does the Lender Use It on a Vacant Property, Step by Step?
The sequence is the same on most files: confirm the property is eligible, order the appraisal, get the rent opinion, run the ratio, and underwrite.
1. Eligibility check. The property must be non-owner-occupied and rent-ready. DSCR loans are designed for investment properties, and they are reviewed differently from a standard owner-occupied mortgage.
2. Appraisal order. The lender orders a full appraisal with the rent schedule, Form 1007 for one unit or Form 1025 for two to four.
3. Comparable selection. The appraiser selects and adjusts the comps.
4. Reconciliation. One monthly market rent is stated.
5. Ratio. That rent becomes the rent used for lender review. The lender divides it by PITIA.
6. Underwriting. The lender weighs the ratio with credit, reserves, leverage, and property eligibility.
The supporting file on a vacant property usually includes the appraisal with its rent schedule, proof of rent-ready condition, and the occupancy and business-purpose certifications. Listing history can also be requested. Borrowers typically sign an affidavit that they will not live in the property.
Across the wholesale network Lendmire works with, most programs want 1.00 or better on this calculation. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Stronger ratios open better pricing and higher leverage.
What Does the Math Look Like?
Say the appraiser’s rent comes in at 1.20 times the full payment on a purchase at 75% LTV. That is a clean file. Rent covers the payment with a cushion, and leverage sits in the typical purchase range of 75% to 80% on an investment property. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Now take the low-schedule version. Same property, same price, but the appraiser’s comps are thinner and the rent lands at 0.95 times the payment. The file now sits under 1.00. Several things can happen, all subject to lender guidelines:
- The loan amount may shrink to bring the payment down.
- The lender may move the file to a select-lender sub-1.00 path, with leverage and terms adjusted.
- Pricing may change.
- A larger down payment lowers the payment and can lift the ratio. It never erases credit floors, reserve rules, or property eligibility.
The lesson is simple. The appraiser’s rent number moves the ratio, and the ratio moves everything else. Credit also matters. A 620 floor exists in parts of the network, most programs want around 660, and 700 or higher unlocks the strongest leverage.
Remember what the ratio does not measure. Clearing 1.00 is not the same as positive cash flow. Repairs, vacancy, management, utilities, and capital expenses all sit outside the calculation.
Vacant, Leased, Above Market, Below Market: Which Rent Counts?
| Situation | Rent generally counted | Note |
|---|---|---|
| Vacant, rent-ready | Appraiser’s market rent | No lease needed on a purchase |
| Lease above market | Market rent | Lease doesn’t raise the ratio |
| Lease below market | Often the lease | Program-dependent |
| Short-term rental | Program-specific method | Form 1007 isn’t built for it |
The “lower of lease or market” habit is common practice rather than a published rule, so confirm how your program treats it. If a signed lease and a rent schedule both exist, Lendmire’s piece Lease Rent vs 1007 Market Rent: Which Figure a DSCR Lender Uses walks through which figure a lender uses.
Purchase vs Refinance: Does Vacancy Change the Answer?
Yes. Vacant purchases are widely permitted. Lenders generally allow a vacant property on an acquisition if it is turnkey. Refinances are typically stricter, and some programs want a lease or operating history. Some allow one or two rent-ready vacant units in a multifamily building. It is program-dependent.
On cash-out, the network tops out around 75% LTV on a standard rental, with about six months of seasoning as the common expectation. A vacant cash-out is the hardest version of this file. If the property is empty and you want equity out, expect more questions. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
What If the Schedule Comes in Low?
Start by asking what drove it. Usually it is thin comps, a condition note, or an unusual layout.
Practical moves, in order:
1. Ask what the lender’s rent basis is before the appraisal is ordered. Don’t learn it after.
2. Give the appraiser support. Leased comps close to the property help more than asking prices. Listing history on your own property can also help.
3. Ask whether the lender has a review path. Some lenders offer one, though results vary.
4. Restructure the deal. A lower loan amount or a larger down payment can restore the ratio. Interest-only periods or extended terms are available through select lenders in the network and lower the payment, though they change other terms.
5. Reconsider the property. Sometimes the honest answer is that the rent doesn’t support the price.
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.
How Do You Stress-Test the Rent Before You Go Under Contract?
Do the appraiser’s work first. Pull leased rentals, not asking prices, from the same area. Match bedroom count and size. Check what each comp’s rent includes. Then compare their condition to the property you’re buying.
Treat online rent estimators as a rough guide. They help your own diligence, but the lender will not use them in place of the schedule.
Condition is the other half. A property that needs only cosmetic work is generally fine. A property that needs real construction usually calls for short-term bridge financing first, then a DSCR refinance once it’s stabilized. That’s a common practitioner path, not a rule. For how lenders judge readiness, see Lendmire’s article How a DSCR Lender Defines Rent-Ready on a Vacant Property.
Where the Rule Breaks Down
Short-term rentals. Fannie Mae’s appraiser update says Form 1007 was not designed for short-term rentals and that multiplying a nightly rate by 30 is incorrect. STR files use other methods, such as platform data or a specialized analysis. In our network, STR purchases go up to 75% LTV, refinances around 70%, and cash-out 70%. Expect a 640+ score and about 12 months of hosting history, with a 1.00 coverage floor on both purchases and refinances. Short-term rental rules can vary by city, county, HOA, and property type, so confirm local rules before relying on projected rental income. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Not rent-ready. Heavy rehab shifts the file away from a direct DSCR purchase.
Two-to-four units. Form 1025 applies, and vacancy rules by unit are program-specific.
Portfolio and blanket loans. Coverage may be measured across the pool rather than property by property. This varies by program.
Ineligible property types. Manufactured homes, log homes, and barndominiums are not offered in these programs, however strong the rent.
Common Misreadings
“A vacant property can’t get a DSCR loan.” It can. A vacant, rent-ready purchase is widely permitted.
“Form 1007 is only for agency loans.” The agencies created it, but DSCR lenders borrow it as an exhibit.
“A lease above market raises my ratio.” Generally not. Market rent caps it.
“A nightly rate times 30 works.” The Fannie Mae update rejects it outright.
“DSCR counts all my expenses.” It counts rent against PITIA. Commercial-style DSCR uses net operating income, but residential DSCR is the simpler rent-to-payment test.
For the full picture across property types and programs, read Lendmire’s complete DSCR loans guide.
Frequently Asked Questions
Does a vacant property hurt my DSCR approval?
Not by itself. A rent-ready vacant purchase generally works on the appraiser’s market rent. Credit, reserves, leverage, and property eligibility still apply, and qualification is subject to lender guidelines.
Can I use my own rent estimate?
No. The rent used for lender review comes from the appraisal. Your estimate is useful for choosing a property, but the lender relies on the third-party opinion.
What’s the difference between a 1007 and a 1025?
Form 1007 covers one-unit properties and arrives as a separate attachment. Form 1025 covers two to four units and carries the rent analysis inside the report.
Do I need a tenant lined up before I buy?
Generally no on a purchase. There is no carrying period waiting for a lease, and no landlord track record is needed on most programs. Refinances are stricter.
What if the rent comes in below my payment?
Coverage under 1.00 is available through select lenders in the network, with leverage and terms adjusted. You can also reduce the loan amount, add down payment, or revisit the property.
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. This article is for information only and is not a commitment to lend.
Tax treatment varies; consult a qualified professional.
Vacant doesn’t mean unfinanceable, but it does mean the appraiser’s comp grid carries the whole file, so the smartest diligence happens before the contract is signed.
About Lendmire
Lendmire is a DSCR-focused mortgage brokerage, NMLS# 2371349, placing investor loans across 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed by the lender around a property’s rental income rather than personal income documentation, which fits LLC-held rentals, self-employed investors, and portfolios scaling past conventional financed-property limits. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 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. Fannie Mae Form 1007, Single-Family Comparable Rent Schedule
2. Freddie Mac Form 1000 / Fannie Mae Form 1007
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How Much a DSCR Lender Lends on a Chattanooga Rental · How to Get a DSCR Loan on a Rental While You Rent Your Home · How to Get a DSCR Loan on a Stonington Rental Property
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
Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.