Updated September 2, 2026
Quick answer
Underwriters generally credit the lower of the signed lease and the appraiser's market rent opinion, before expenses. Base rent counts; most of what tenants pay on top of it — pet fees, parking, late charges, utility reimbursements — usually does not. A vacant property is not disqualifying: it is underwritten on market rent alone.
The Rule Underwriters Actually Apply
The income half of a DSCR calculation is not simply what a tenant pays you. It is the more conservative of two figures:
- The signed lease — the contractual rent on the property today
- The appraiser's market rent opinion — usually a Form 1007 single-family comparable rent schedule, or a Form 1025 for two- to four-unit property
Take the lower. That single rule explains most of the gap between what an owner expects and what an underwriter produces. If your lease is $2,600 and the appraiser says the market is $2,300, the ratio is built on $2,300.
It works the other way too. If you have deliberately kept a good tenant below market, the appraisal can lift the underwritten figure above your lease — though many programs cap how far above the lease they will go.
What Is Credited
Base rent under an arm's-length lease is the core of it. Beyond that, treatment varies by program, but the common pattern is:
| Income | Usual treatment | Why |
|---|---|---|
| Base monthly rent | Counted | Contractual and verifiable against the lease |
| Market rent on a vacant unit | Counted | Supported by the appraiser's rent schedule |
| Rent from each unit of a 2–4 unit property | Counted | Underwritten per unit, then totalled |
| Pet rent, parking, storage | Usually excluded | Treated as ancillary and not durable |
| Utility reimbursements | Usually excluded | Offsets a cost rather than adding income |
| Late fees, one-off charges | Excluded | Not recurring |
| Rent from a family member below market | Scrutinised | Not arm's length; market rent usually governs |
If a meaningful share of your income is ancillary, say so early. It rarely helps the ratio, and finding out at underwriting is worse than finding out at application.
Vacant Properties Are Not Disqualifying
One of the genuine advantages of DSCR underwriting is that a property with no tenant can still be financed. There is no lease to read, so the appraiser's market rent opinion carries the whole income side.
That makes the appraisal unusually important. On a tenanted property a weak rent opinion is bounded by the lease; on a vacant one it is the only number in play. It is worth giving the appraiser genuine comparable rentals rather than leaving the selection entirely to them.
Some programs apply a larger vacancy deduction, a lower maximum loan-to-value, or both, on a property that is not yet rented. Ask which applies before you assume a vacant purchase prices the same as a tenanted one.
Short-Term and Seasonal Rent
Income from short-term letting is treated differently again, and by no means every DSCR lender accepts it. Where it is accepted, the usual evidence is a trailing twelve months of platform statements, sometimes averaged against a market rent opinion for long-term use as a floor.
Seasonal properties raise the same question in a different form: twelve months of income arriving in five. Underwriters generally annualise and then apply a heavier vacancy assumption. We cover this in full in DSCR loans for short-term rentals.
How to Document It
The paperwork is short, and having it ready is the difference between a quick file and a slow one:
- The current lease, signed and dated, for every occupied unit
- Proof the rent is actually paid — typically bank statements showing the deposits, on many programs
- The appraisal with a rent schedule — Form 1007 for single-family, Form 1025 for two to four units
- Platform statements where short-term income is being used
- A rent roll where the property has several units
What you are not asked for is the point of the product: no tax returns, no W-2s, no debt-to-income calculation. If a lender starts asking for personal income documents on a DSCR file, ask why.
Frequently Asked Questions
Do underwriters use my actual rent or market rent?
Generally the lower of the two. The signed lease is compared against the appraiser's market rent opinion — a Form 1007 for single-family or Form 1025 for two to four units — and the conservative figure is used. An above-market lease does not lift the ratio.
Can I get a DSCR loan on a vacant property?
Yes. With no lease to read, the appraiser's market rent opinion carries the entire income side of the calculation. Some programs apply a larger vacancy deduction or a lower maximum loan-to-value on an unrented property, so confirm the terms before assuming they match a tenanted purchase.
Does pet rent or parking income count toward DSCR?
Usually not. Most programs credit base rent only and treat pet rent, parking, storage and utility reimbursements as ancillary income that is not durable enough to underwrite. Late fees and one-off charges are excluded outright.
How is rental income counted on a duplex or fourplex?
Per unit, then totalled. Each unit is underwritten against its own lease or market rent opinion, commonly on a Form 1025, and the sum becomes the gross income figure the ratio is built from.
Will renting to a family member cause a problem?
It invites scrutiny. A below-market lease to a relative is not an arm's-length transaction, so underwriters generally fall back to the appraiser's market rent opinion. Disclose the relationship rather than let it surface later.
Sources & Further Reading
- IRS Publication 527: Residential Rental Property — The federal definition of rental income and deductible expenses - the same schedule an underwriter reads when your return is on file.
- U.S. Census Bureau Housing Vacancy Survey — Quarterly rental vacancy rates by region - the public check on whether a market rent assumption is realistic.
- HUD Multifamily Housing Programs — Federal multifamily programs and their equity requirements, the benchmark conventional multifamily terms are quoted against.
Figures above describe ranges commonly seen across DSCR lenders and reflect published guidance as of the date on this page. Confirm current terms with the cited source or your lender before acting.