The Quick Read: The appraiser’s market rent schedule is an independent opinion of what the property should rent for. The in-place lease is evidence of what one tenant agreed to pay. Many DSCR programs compare the two and count the lower figure, though each program sets its own rule, so confirm it before you apply.
- The schedule comes from comparable rentals, not from your lease.
- The lease feeds the appraiser’s analysis but does not override it.
- A lease above market often earns nothing extra; a lease below market can hold coverage down.
- A vacant property runs on the market rent figure alone.
- Short-term rentals generally follow a separate documented-income path.
The Honest Answer: Who Each One Is For
Neither document is a choice you make. Both usually exist on the same file, and the lender’s program decides which one becomes the rent in your coverage ratio.
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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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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.
Still, the two documents serve different situations. The market rent schedule is often a strong option for a vacant property, a newly renovated unit, or a lease that is stale. The in-place lease matters most when a tenant is paying a documented amount, and it is the stronger evidence when the lease sits at or below what comparables show.
Think of it this way. The schedule answers “what could this property rent for?” The lease answers “what is it renting for right now?” A lender cares about both answers, and a cautious one trusts the lower.
This is a program convention, not a regulation. No federal regulator sets the lease-versus-market-rent treatment on DSCR loans. Each program’s guidelines decide it. Across our wholesale network, the practice varies, so the table below describes common patterns rather than a single rule.
Side-by-Side
| Factor | Market Rent Schedule | In-Place Lease |
|---|---|---|
| Who produces it | The appraiser | Owner and tenant |
| Basis | Comparable rentals nearby | One tenant’s agreement |
| What it proves | Typical market rent | Rent a tenant agreed to pay |
| Documentation | Appraisal attachment | Signed lease, often proof of payment |
| Property types | One-unit and condo; 2-4 units use a unit-level report | Any rented unit |
| Vacant property | Used alone | Not available |
| Short-term rentals | Generally does not apply | Not the basis either |
| Entity vesting | No effect on the figure | No effect on the figure |
| Timeline | Tied to the appraisal order | Already exists before the appraisal |
| Reserve expectations | Set by the program, not the document | Set by the program, not the document |
Entity vesting, such as an LLC, does not change which rent counts. Holding title in an LLC is subject to lender program eligibility, and it is a separate question from the rent figure.
What Is the Market Rent Schedule?
The market rent schedule is the appraiser’s estimate of monthly rent for a property, built from comparable rentals. For a one-unit property, the appraiser completes a form shared by both agencies: Freddie Mac calls it Form 1000, and Fannie Mae calls it Form 1007. Freddie Mac’s copy of the form describes it as an attachment to the appraisal. The lender obtains the market rent from the appraiser through it.
DSCR programs borrow this form. They did not create it. Fannie Mae’s Appraiser Update says the form documents estimated monthly market rent for a single-family investment property and can also be used for condos.
For 2-4 unit properties, a separate small-residential-income report carries unit-level rent. The appraiser reconciles the comparables into a single “Indicated Monthly Market Rent” line. That number is what people mean by the market rent schedule.
Two points about how it is built:
- The appraiser pulls comparable rentals and adjusts only for significant differences between those comparables and your property.
- The comparables the appraiser chooses decide the outcome. You cannot supply this opinion yourself.
What Is the In-Place Lease?
The in-place lease is a contract between you and your tenant. It shows what one tenant agreed to pay, for what term, with what conditions.
It is not an appraiser’s opinion. The appraiser may read the lease terms as part of the rent analysis, but the lease does not replace the comparable-rent work. This surprises many new investors. A signed lease at a generous number does not make the appraiser’s schedule match it.
A lease-based path usually needs the signed lease and often proof the tenant pays it, such as deposits or payment records. Programs set their own documentation, so ask early what yours wants.
Which One Counts? The Lower-of Convention
A common program convention counts the lower of the lease and the market rent. It is common, not universal, and you should confirm it for the program you are targeting. These are typical outcomes:
| Situation | Rent that generally counts |
|---|---|
| Lease below market | Lease |
| Lease at market | Either; they agree |
| Lease above market | Market rent |
| Vacant | Market rent alone |
| Month-to-month or expired lease | Often market rent |
Why do lenders lean toward the lower figure? The lease is evidence from one tenant. The schedule is an independent opinion built from many rentals. Rent above the market is hard to count on when the lease ends, so the extra is treated as not durable. Rent below market is real money you actually collect, so it counts.
DSCR compares rent to the full monthly obligation: principal, interest, taxes, insurance, and any association dues. Many select programs start at a 1.00 coverage floor, and stronger ratios open better terms and leverage. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Either way, the rent figure you feed into the ratio is the number this article is about.
When the Market Rent Schedule Is the Better Fit
The schedule is the stronger tool in four cases.
Vacant property. No lease exists, so the schedule stands alone. This is the usual path for a purchase of an empty rental or a property you plan to rent after closing.
Stale or expired lease. A tenant who has rolled to month-to-month, or a lease signed years ago, may no longer reflect the market. Many programs lean on the schedule here.
Recent improvements. Say you renovated the unit and are re-leasing it to a new tenant, but the lease has not yet been signed or has not been in place for long. Dated improvements, documented for the appraiser, can support a higher comparable rent.
Inherited or family leases. A below-market lease with a relative or an inherited tenant can hold counted rent down. If your program allows market rent in some of these cases, the schedule may be the stronger route. Treatment here is program-dependent, so ask before you assume.
On a refinance, the lender may want the schedule alongside lease evidence. Fannie Mae’s update notes that on refinances the form is used in combination with tax returns or lease agreements, while on purchases it may be used stand-alone. That is agency contrast only. DSCR programs set their own documentation.
When the In-Place Lease Is the Better Fit
The lease is the stronger tool when a real tenant pays real rent and the number is at or below what comparables show.
A lease at market gives you documented, current income that matches the appraiser’s view. That clean agreement tends to make for a straightforward file.
A lease below market is a trade-off. The lease usually counts, so coverage reflects what you actually collect. That is honest, but it can lower your ratio. If the gap is large, you may have a choice to make: renew at market before the appraisal, or accept the lower coverage.
One caution. A discounted lease signed just to fill a unit before the appraisal can hurt you. If the lease is the lower figure, it may be the one that counts. Think about timing before you sign.
An above-market lease deserves a plain statement. It may earn nothing extra. If your lease reads higher than the comparables, expect market rent to carry the file under a lower-of convention.
Short-Term Rentals Are a Different Path
The lease-versus-schedule comparison generally does not apply to short-term rentals. The monthly rent form was not designed for them. Fannie Mae’s update says it was not designed for appraising single-family properties used as short-term rentals, and it cannot estimate a nightly fee.
McKissock’s appraiser education says the form documents monthly rent for single-family homes, not nightly rent or business income. Competent appraisers report short-term income in a separate narrative addendum.
In our network, short-term rental files run on their own track. Purchases go up to 75% LTV, refinances sit around 70%, and cash-out refinances top out at 70%. Expect a credit score of 640 or higher and about 12 months of hosting history. Coverage floors run 1.00 on purchases and refinances. 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. Our guide to DSCR financing for Airbnb-style rentals sits inside the complete DSCR loans guide below. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
How the Two Documents Disagree, and What to Do
A lease and an appraisal can disagree. When they do, the program’s selection rule matters more than either document. A few practical steps help.
1. Check your lease against nearby monthly-leased comparables before the appraisal. If you find a gap, you will know the likely outcome.
2. Hand the appraiser the lease, any rent roll, and dated improvements. They can only weigh what they see.
3. Ask your broker how the target program treats lease versus market rent, month-to-month leases, and vacant units. Programs differ.
4. If the schedule comes in low, review the comparables for stale or mismatched rentals. A well-supported question about comps is reasonable. Outcomes are never guaranteed.
5. Consider leverage as a second lever. A larger down payment lowers the monthly payment and can lift the ratio. It does not erase leverage caps, credit floors, reserve rules, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.
For a deeper look at how this plays out on a purchase, see Lendmire’s piece 1007 Market Rent vs Lease in Place on a DSCR Purchase.
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.
What Else Shapes the File
The rent figure is one piece. The same appraisal also sets value, which drives leverage. Most purchase files land at 75% to 80% LTV on an investment property, with select high-leverage programs reaching 85% at roughly a 700 score or better. Cash-out refinances top out around 75% LTV, with about six months of seasoning as the common expectation. Credit floors start at 620 in parts of the network, most programs want about 660, and 700 or higher opens the strongest tiers.
Reserves vary by lender, leverage, and loan size. About six months of PITIA is common, with larger loans stepping up to about nine months. These are typical ranges subject to lender guidelines, not commitments.
Clearing 1.00 is also not the same as positive cash flow. DSCR compares rent to the monthly obligation only. Repairs, vacancy, management, utilities, and capital expenses sit outside the calculation.
Manufactured homes, log homes, and barndominiums are not offered in these programs, whatever the rent figure shows.
Key Terms Defined
Market rent schedule: The appraiser’s estimate of monthly rent, built from comparable rentals.
In-place lease: The signed agreement between owner and tenant showing the rent actually agreed to.
Indicated Monthly Market Rent: The final reconciled rent figure on the appraiser’s rent form.
Comparable rentals: Nearby similar properties rented on a monthly basis, used to support the market rent opinion.
PITIA: Principal, interest, taxes, insurance, and association dues, the full monthly obligation in the coverage ratio.
Lower-of convention: A common program practice of counting the smaller of the lease rent and the market rent.
Common Misconceptions
“The appraiser grades my lease.” Not so. The form asks for market rent from comparables. It is not a review of your lease.
“Nightly rate times 30 equals market rent.” The agency update says alternative definitions and methods are not acceptable on that form.
“The lower-of rule is a regulation.” No regulator sets it. It is a program convention, so confirm it for each program.
“The 1007 is a DSCR form.” It is an agency form that DSCR programs borrow. Fannie Mae says it is required only when conventional lending uses rental income to qualify.
For the broader picture, read the complete DSCR loans guide.
Frequently Asked Questions
Does an above-market lease raise my coverage ratio?
Usually not. Under the common lower-of convention, market rent counts when the lease is higher.
Can I use market rent instead of my lease?
It depends on the program. On a vacant property, market rent is the only figure. With a lease in place, many programs count the lower of the two. Some treat month-to-month or expired leases as market rent.
Does the rent schedule replace the lease?
No. The schedule is the appraiser’s independent opinion, and the lease is evidence of what one tenant pays. A lease-based path usually still needs the signed lease and often proof of payment.
What if the appraiser’s rent comes in lower than I expected?
Review the comparables for stale or mismatched rentals and give the appraiser the lease, rent roll, and dated improvements. The result is not guaranteed to change. Leverage adjustments can help, but they do not remove program limits.
Does this apply to short-term rentals?
Generally not. The monthly rent form was not designed for nightly income, and those files run on a separate documented-income path set by each program.
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. Lendmire is a mortgage broker arranging DSCR financing through select lenders in its wholesale network, 41 markets including Washington, D.C. Qualification is subject to lender guidelines and is not a commitment to lend. Tax treatment varies; consult a qualified professional.
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.
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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
2. Fannie Mae Appraiser Update
3. McKissock Learning, Form 1007 and short-term rental appraisals
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How a DSCR Lender Counts Rent From Both Units of a Duplex · Can a W-2 Employee Get a DSCR Loan on a Rental? · Does a DSCR Loan Need a 1007 Rent Schedule?
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.