The Quick Read: Yes, in most cases a fourplex with one empty unit can close on a DSCR loan, because the lender credits the empty unit at the appraiser’s market-rent opinion instead of at zero. The three leased units are credited from their leases, or from market rent when that is lower, and the combined rent is divided by the full building payment.
- The empty unit is counted at appraised market rent, not zero, on most programs.
- The 2-4 unit appraisal report (Form 1025) carries the per-unit rent opinion.
- Some programs want a signed lease or rent proof on the vacant unit first.
- Leverage, credit and reserve rules stay the same whether a unit is empty or not.
- Clearing 1.00 on paper is not the same as positive cash flow.
Across the wholesale network of DSCR lenders that Lendmire works with, a single vacancy in a four-unit building is routine. It is not a deal-killer. It is a documentation question and an appraisal question. This article walks through how the number gets built, where files go sideways, and what to line up before the appraisal is ordered.
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As of Oct 15, 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.
How Does a Lender Count the Vacant Unit?
The vacant unit is counted at the appraiser’s market rent, not at zero. The occupied units use lease rent, usually capped by market rent. The four numbers are summed and divided by one payment covering principal, interest, taxes, insurance and any association dues.
DSCR loans are non-QM investor products. No federal agency sets the vacancy rule. Each program’s guidelines decide it, which is why treatment varies from one lender to the next. Most programs in the network accept market rent for a vacant unit on a purchase. A few want a signed lease or proof of rent first. Lendmire’s piece How DSCR Lenders Treat One Vacant Unit in a Fourplex goes deeper on that program-by-program spread.
The building stays a four-unit property. It does not turn into a three-unit loan because one door is empty. Classification, appraisal and pricing all treat it as a fourplex.
What Does the Appraiser Actually Do for an Empty Unit?
The appraiser reports a market-rent opinion for the empty unit, using rental comparables and a rent schedule on the 2-4 unit report. Fannie Mae’s Selling Guide lists Form 1025 as the appraisal report for two- to four-unit properties, and its learning center lists it among appraiser forms.
That is contrast only. DSCR loans are not agency loans, and agency rules do not govern them. DSCR files simply borrow the same appraisal form. Form 1007 is the single-family rent schedule, so it is not the form for a fourplex.
Here is the catch. Market rent is an opinion, not a lease. One appraiser’s comps set the ceiling on that unit’s credit. If the comps come in light, the vacant unit contributes less, and there is no lease to argue the number up. Files with a thin cushion above 1.00 are the ones that break on this.
Worked Example: Leased Units Plus One Vacant
These are modeled coverage readings, not market data. Picture a fourplex where three units are leased at or near market and one is vacant. The ratios below show how the vacant unit’s credit moves the result.
| Scenario | Vacant unit counted | Coverage read |
|---|---|---|
| Appraiser rent in line with leases | At market rent | Around 1.2x |
| Appraiser rent comes in low | At lower market rent | Low 1.1x range |
| Vacant unit counted at zero | Zero | Drops toward 0.9x |
The point is the gap between rows one and three. A building that clears comfortably with the vacant unit at market rent can fall under 1.00 if a lender counted it at zero. That is why program choice matters, and why most files in the network do not use the zero treatment on a purchase.
On the second row, the building still clears. On the third, it would not on long-term rent alone. In that case, the structures a lender may review include a select-lender path with coverage below 1.00 (available through select lenders in the network, with leverage and terms adjusted), a larger down payment, or a different program. Qualification stays subject to lender guidelines, credit approval and property review.
Where Do These Files Go Wrong?
The common failure points are a low appraised rent, a vacant unit that is not rent-ready, and below-market leases on the occupied units. Each one drags the combined rent down, and none of them is fixed by a bigger down payment alone.
Condition. A unit under renovation or missing a kitchen is not rent-ready. Many lenders leave it out of the rent or ask for it to be cured first. This is the main reason a vacancy turns into a problem. A clean, near rent-ready unit is a different file from a gutted one.
Stale or month-to-month leases. On occupied units, these generally fall back to market rent.
Below-market leases. Many lenders use the lesser of lease rent and market rent. A legacy tenant paying under market lowers that unit’s credit.
Missing entity or lease paperwork. If the borrower holds title in an LLC, the entity documents need to be in the file, subject to lender program eligibility. Leases, proof of payment and a rent roll for the three occupied units should be ready before the file goes in.
Practitioners also note that a unit needing real work may call for a short-term bridge loan first, with a DSCR refinance once the building is stabilized. That is a different file, not a DSCR purchase.
Vacant at Closing Versus Vacant After Closing
Qualifying at closing is a paper test. Living with the vacancy afterward is a cash test. DSCR compares rent to PITIA only. Repairs, vacancy, management, utilities and capex sit outside the calculation.
So a ratio above 1.00 does not mean the empty unit is paying you. Budget for the real lease-up period, and keep reserves in view. Reserves vary by lender, leverage, loan size and transaction type. They commonly run around 6 months of PITIA, and loans above $1,500,000 typically step up to about 9 months. Reserves documentation is part of the file, so statements need to show the funds are seasoned and accessible.
A fourplex does spread risk better than smaller buildings. One empty unit is 25% of the units, against 50% on a duplex. That concentration difference is the real advantage of the four-door building.
Purchase Versus Refinance
On a purchase, the vacant unit typically qualifies off appraised market rent per unit. On a refinance, some programs are stricter about vacancy and others are more flexible when only one or two units of a multifamily building are empty, because the occupied units already demonstrate income.
Lendmire’s page on qualifying a vacant property for a DSCR purchase covers the purchase side in more detail.
Leverage differs by transaction. Most purchase files land at 75%-80% LTV on an investment property. Cash-out tops out around 75% LTV, and about 6 months of seasoning is the common expectation. A vacancy does not lift those caps. Credit tiers run from a 620 floor in parts of the network to roughly 660 for most programs, with 700+ unlocking the strongest tiers. Loan sizes run up to $3,000,000 on standard programs. All of it is subject to lender guidelines.
How Does a Fourplex Compare With Smaller Buildings?
| Property | One vacancy equals | Appraisal form |
|---|---|---|
| Single-family | 100% of rent | Form 1007 |
| Duplex | 50% of units | Form 1025 |
| Triplex | About 33% of units | Form 1025 |
| Fourplex | 25% of units | Form 1025 |
Five or more units move to commercial or small-balance multifamily underwriting, which uses net operating income instead of gross rent. That is a different product from the residential 1-4 unit DSCR file described here. For the broader picture on small multifamily, the complete DSCR loans guide lays out how these programs fit together.
One more rule: the building must be non-owner-occupied. The borrower cannot live in the vacant unit. DSCR loans are designed for investment properties, and there is no unit-count exception. Owner-occupancy is a different product entirely, and it is not a vacancy question.
Pre-Offer Checklist
Run these steps before the appraisal is ordered.
1. Confirm the legal unit count. The building should be a legal four-unit property. Get that in writing before relying on four rent streams.
2. Gather the leases and rent roll. Collect the three leases, proof of payment, and a current rent roll with unit-by-unit rents.
3. Inspect the vacant unit. Decide whether it is rent-ready. If it needs work, price the repairs and ask the lender whether the unit will be excluded from rent.
4. Ask the program question. Confirm whether the program accepts market rent on the vacant unit or wants a signed lease first.
5. Stress the number. Run the coverage with the vacant unit at a lower market rent than you hope for. If it still clears, the file has room.
6. Line up reserves and entity documents. Have seasoned statements ready, plus LLC documents if the property will be titled in an entity.
7. Have a low-appraisal plan. If the rent opinion lands light, the options include renegotiating price, adjusting loan size, or putting more down. More equity lowers the payment and can lift the ratio, but it never erases leverage caps, credit floors or reserve rules.
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.
Key Terms Defined
DSCR: Monthly rent divided by the monthly housing payment on the property.
PITIA: Principal, interest, taxes, insurance and association dues, the full monthly obligation.
Market rent: The appraiser’s opinion of what a unit would rent for today.
In-place rent: The rent a tenant actually pays under a current lease.
Form 1025: The appraisal report used for two- to four-unit properties.
Frequently Asked Questions
Does one vacant unit change the leverage on a fourplex?
No, the leverage tiers do not change because a unit is empty. Purchases typically run 75%-80% LTV on an investment property, subject to lender guidelines. The vacancy affects the rent side of the file, not the equity side.
Does the vacant unit need a signed lease?
Not on most programs, which accept appraised market rent on a purchase. Some programs want a lease, deposit records or rent proof first. A signed lease can still make the file cleaner, and the unit generally needs to be rent-ready.
What if two or more units are vacant?
Lender rules differ on how many empty units are acceptable at closing. More vacancy leans harder on one appraiser’s rent opinion and on the condition of each unit, so the cushion above 1.00 matters more. Ask the program before writing the offer.
Can I live in the empty unit?
No. DSCR loans are for non-owner-occupied investment property, and there is no exception for fourplexes. Living in one unit moves the file to a different product.
Can an LLC hold title on a fourplex with a vacant unit?
Yes, in many cases, subject to lender program eligibility. The entity documents and the leases for the occupied units both need to be in the file.
Is a ratio above 1.00 the same as positive cash flow?
No. The ratio compares rent to the housing payment only. Repairs, vacancy, management and utilities sit outside it, so budget for the lease-up period separately.
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. Programs change and every file is underwritten individually. This is not a commitment to lend. Tax treatment varies; consult a qualified professional.
About Lendmire
Lendmire (NMLS# 2371349) is a DSCR-focused mortgage broker that helps arrange investor financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR eligibility is generally reviewed by the lender around the property’s rental income rather than personal income documentation, subject to lender guidelines — which works for self-employed investors, LLC operators, and portfolios above four financed properties. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
2. Fannie Mae Learning Center, Appraisers & Property Underwriting
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can an Investor With a W-2 Job Skip the Bank for a DSCR Loan? · How to Underwrite a Condo on a DSCR Loan With the Dues and Budget · Closing in an LLC vs Deeding to an LLC After Closing on a DSCR Rental
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.