The Quick Read: On most DSCR files, the lender does not pick a winner between the two documents. It compares the signed lease with the appraiser’s market-rent opinion and commonly counts the lower figure, so a fresh lease at a high rent rarely lifts your coverage ratio. The lease proves what a tenant agreed to pay. The appraiser’s rent schedule shows what comparable rentals say the unit should earn. Program rules vary by lender.
- A new lease above market usually earns no credit for the excess.
- A new lease below market generally stays at the lease figure.
- A vacant property relies on the appraiser’s market rent alone.
- The lender, not the appraiser or the borrower, decides which figure to use.
- Clearing 1.00 on a DSCR loan is not the same as positive cash flow.
The Honest Answer: Who Each Document Is For
The newly signed lease is your evidence. It matters most when the property is already tenant-occupied and the rent is at or below what the market supports. It also matters because it shows a tenant is in place. The appraiser’s rent schedule is the lender’s independent yardstick. It matters most when there is no lease, when the lease looks high, or when the lender wants an outside check on your number.
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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.
Think of it this way. The lease answers “what is this tenant paying?” The rent schedule answers “what would a reasonable tenant pay for this unit?” Lenders care about both questions, but the second one usually sets the ceiling.
This is a program convention, not a law. Across the wholesale network Lendmire works with, many programs follow the lower-of approach, but exact treatment differs by lender, property type, and loan scenario. Lendmire’s complete DSCR loans guide covers the broader qualification picture.
Side-by-Side
The column for the other option reflects published industry norms, not a single program. Both are used across the lenders Lendmire places files with.
| Factor | Newly signed lease | Appraiser rent schedule |
|---|---|---|
| Who produces it | Borrower and tenant | Independent appraiser |
| Basis | Contract rent | Comparable rentals |
| Qualification role | Often capped at market | Commonly sets the ceiling |
| Vacant property | Not available | Sole rent figure |
| Documents | Signed lease, deposit proof, payment history | Form 1007 (1–unit) or Form 1025 (2–4 units) |
| Property types | Any leased property | Forms differ by unit count |
| Entity vesting | Lease can name an LLC landlord, subject to lender program eligibility | Appraisal is of the property, not the owner |
| Timeline | Signed before or after the order | Ordered by the lender during review |
| Reserves | Not affected by the lease itself | Not affected by the schedule itself |
Reserves follow the loan, not the rent document. Across the network they are commonly around 6 months of PITIA, and about 9 months above $1,500,000. PITIA is the full monthly obligation: principal, interest, taxes, insurance, and association dues.
What the Appraiser’s Rent Schedule Actually Is
The rent schedule is a form the appraiser completes alongside the value opinion. For one-unit homes, it is Fannie Mae Form 1007, which is jointly numbered with Freddie Mac’s form 1000. The form says the appraiser prepares it as an attachment for a single-family investment property. The appraiser reconciles several rental comparables to one monthly market-rent figure.
Two-to-four unit properties use a different form that reports market rent per unit. A leased small multifamily may also come with an income-and-expense report. Only the form names and methods are borrowed from the agency world. DSCR guidelines come from individual lenders, not from the agencies.
The schedule is an opinion about the unit. It does not grade your lease or your tenant. The appraiser estimates rent, and the lender chooses how to use it.
When a Newly Signed Lease Is the Better Fit
The lease does its best work in a few situations.
The rent is at or below market. If your tenant pays what comparables suggest, the two figures land close together. The file is clean and the lease supports the appraiser.
You can document the lease properly. Expect to supply the executed lease and proof of the security deposit. Payment history helps where it exists. A lease that is month-to-month or expired is treated as support only, and market rent usually leads.
You are pricing a refinance on an occupied unit. An in-place tenant tells the lender the property is functioning. That story matters even when the appraiser’s number sets the ceiling.
The lease is the lower number. A below-market lease generally stays at the lease figure. That can pull coverage down, so a renewal at market can strengthen the file. Lendmire’s piece Lease Rent vs 1007 Market Rent: Which Figure a DSCR Lender Uses walks through that comparison.
The lease is also the weaker tool in a few cases. A lease signed just before application at a rent far above the comparables does not usually improve the ratio. A lease between related parties draws closer review. Free-rent concessions can lower the effective rent below the stated figure.
When the Appraiser Rent Schedule Is the Better Fit
The schedule carries the file when the lease cannot.
The property is vacant or newly purchased. With no tenant, there is nothing to compare. The appraiser’s market rent carries the whole numerator of the ratio.
The lease looks high. An above-market lease signals risk to a lender, because the income may not hold at turnover. The independent figure protects against that.
The lease is stale or missing. Expired or month-to-month tenancies lean on market rent.
You want a ceiling before you shop. Model your deal on market rent first, then treat the lease as a bonus only if it lands higher. That keeps surprises small.
The schedule is the weaker tool when the comps are thin or poorly matched. A low schedule can cut your ratio even when your lease is strong. Then the fixes are practical: more down payment, a different property, or a different loan structure.
How the Ratio Actually Moves
DSCR is monthly rent divided by PITIA. Here is the logic with ratios only, as a modeled illustration and not market data.
Suppose a lease supports a ratio of about 1.25x and the appraiser’s schedule supports about 1.10x. With a lower-of approach, the file is reviewed at 1.10x. The extra rent in the lease does nothing.
Flip it. If the lease supports about 1.05x and the schedule supports about 1.20x, the file generally stays near 1.05x. The lease is lower, so it governs.
Now the vacant case. No lease exists, so the schedule alone sets the ratio.
Coverage affects more than approval. On many programs, stronger ratios open better leverage and pricing, and weaker ones may reduce leverage. 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. Purchase leverage commonly lands at 75% to 80% LTV on investment properties, subject to lender guidelines.
Remember what the ratio leaves out. DSCR compares rent to PITIA only. Repairs, vacancy, management, utilities, and capital expenses sit outside it. Clearing 1.00 is not positive cash flow.
Timing: Lease and Appraisal Sequencing
A lease signed before the appraisal is ordered gives the appraiser and lender the full picture early. A lease signed after the appraisal can still be submitted, but the market-rent figure will already exist. If rent changes between appraisal and review, the lender decides how to treat it.
Here is a practical sequence:
1. Sign the lease at a rent you can defend with real comparables.
2. Gather the executed lease and deposit proof.
3. Let the lender order the appraisal and review the rent schedule.
4. Supply recent comparable rentals if you believe the figure is low.
5. Expect the lender to apply its own rule to the two numbers.
A reconsideration request can ask the appraiser to look again, but it cannot force a higher number. Legitimate local rental comps help. Pressure does not.
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.
Edge Cases Worth Knowing
Short-term rentals. The 1007 was built to price a traditional 12-month tenant. Fannie Mae’s appraiser guidance on short-term rentals addresses how it fits with that form. Across our network, short-term rental programs have their own rules: purchase up to 75% LTV, refinance around 70%, and cash-out at 70% for short-term-rental collateral, with a 640+ score and about 12 months of hosting history. 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. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Partly leased small multifamily. Leased units are compared unit by unit, and vacant units use market rent.
Related-party tenants. Expect market-level rent and closer review of the lease and payment history.
Government-subsidized rent. Contract rent above market usually does not lift coverage.
Contrast with FHA. For a different program, HUD’s FHA guidance uses a rent schedule alongside a prospective lease. That shows the two documents working together elsewhere, but it is not how DSCR files are underwritten.
Property eligibility. Manufactured homes, log homes, and barndominiums are not offered in the network’s DSCR programs, whatever the lease says.
What Brokers See in Practice
Across many files, the pattern repeats. The borrower’s lease is often the first number in the conversation, and the appraiser’s figure is the one that arrives later and moves the quote. Borrowers who model on market rent first are rarely surprised. The ones who anchor on a high lease tend to be.
Key Terms Defined
Market rent: the monthly rent comparable properties suggest a unit would earn on the open market.
In-place rent: the rent a tenant currently pays under a signed lease.
Rent schedule: the appraiser’s form that reconciles rental comparables into a market-rent opinion.
PITIA: principal, interest, taxes, insurance, and association dues, the full monthly obligation used in the ratio.
DSCR: the debt service coverage ratio, or rent used for lender review divided by PITIA.
A Balanced Verdict
Neither document wins on its own. The appraiser’s rent schedule usually sets the ceiling, and the lease can only hold you at or below it. If your lease sits at or under market, it helps. If it sits above, it is reviewed at the lower number. If the property is vacant, the schedule is all you have.
The practical move is simple: plan around the market-rent figure before contract, then treat the lease as confirmation. DSCR loans qualify primarily on property-level rental income covering the payment, subject to lender guidelines. Credit tiers generally start at a 620 floor, with most programs wanting around 660 and 700+ unlocking the strongest leverage, again subject to lender review.
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. Investors can reach the team at 828-256-2183.
Frequently Asked Questions
Can a new lease at higher rent raise my ratio?
Usually not. On most programs the lender counts the lower of the lease and the appraiser’s market rent, so rent above market earns no credit for the excess. Terms vary by lender.
Does a lease signed days ago carry less weight?
It can, because a lender may want more support than a bare signature. Expect to supply the executed lease and deposit proof, and payment history where it exists.
What if my lease is below the appraiser’s figure?
The lease generally governs, which can pull coverage down. A renewal at market can improve the file later. Some lenders may review the scenario differently, so ask which basis applies.
Who decides which rent counts?
The lender decides. The appraiser provides an independent opinion of market rent, and the borrower provides the lease. Program guidelines control how the two are combined.
Does the rent schedule capture Airbnb income?
No. The 1007 documents monthly market rent only. Short-term rental files run through separate program rules.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage built around DSCR investor lending, with programs available in 41 markets, including Washington, D.C. DSCR lenders commonly evaluate rental-income coverage instead of personal income paperwork — a practical fit for LLC-owned and multi-property investors. Terms vary by lender, property, leverage, and program. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Rent a DSCR-Financed Property to a Family Member? · Above-Market Lease vs Appraiser Rent Schedule on a DSCR Loan · How a DSCR Lender Tests a Family Lease Against Market Rent
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.