Did you know that when doing a DSCR refinance, monthly gross rents are determined by the higher of the actual lease or the market rent listed on the appraisal form (1007/1025)?
Here’s how it works:
- If the actual lease amount is higher than the market rent, lenders will require two months of proof showing that the higher lease payments have been received.
- To ensure the numbers are realistic, the lease amount cannot exceed 120% of the estimated market rent as reported in the 1007/1025 report.
This guideline helps strike a balance between borrower flexibility and lender risk management, making DSCR refinances a powerful tool for real estate investors while maintaining consistent and reliable underwriting.
If you’re considering a DSCR refinance, understanding how rental income is evaluated can help you better prepare and maximize your approval potential.
Feel free to contact our office and consult with a DSCR loan specialist.
