Can You Use Projected Rent to Qualify for a DSCR Loan?

4 days ago
3 min read

One of the biggest advantages of a DSCR loan is that qualification is based on the property’s income — not your personal tax returns.

But what if the property isn’t rented yet?

Can you still qualify using projected rent?

In many cases, yes — but it depends on how that rent is calculated and supported.

Let’s break it down.

How DSCR Qualification Works

DSCR stands for Debt Service Coverage Ratio.

Lenders compare:

Gross rental income divided byTotal monthly debt obligation

If the ratio meets the program requirement (often 1.0 or higher), the loan may qualify.

The key question becomes:

What rental income number does the lender use?

Using Projected Market Rent Instead of a Lease

If the property is:

Vacant
Newly purchased
Recently renovated
A short-term rental conversion
New construction

Lenders typically rely on an appraisal with a market rent analysis.

The appraiser provides a form (often Form 1007 or 1025 for multifamily) that estimates:

Fair market monthly rent
Comparable rental properties
Local demand indicators

That projected market rent is then used to calculate DSCR.

When Projected Rent Works Best

Projected rent is commonly used for:

Recently acquired rental properties
Properties transitioning from owner-occupied to rental
BRRRR strategy investors
Newly renovated homes
Stabilized short-term rental conversions

If the numbers support the ratio, a lease is not always required.

How This Plays Out in Florida Markets

In active investor markets like Florida or Texas, projected rent qualification is common — especially in cities with strong rental demand and investor activity.

For example, investors financing long-term rental properties in Florida or Texas often rely on market rent appraisals when:

Acquiring value-add properties
Converting primary residences to rentals
Purchasing vacant properties

You can review current program details here for Florida DSCR loan options and Texas DSCR loan options.

The key is making sure the projected rent supports the required DSCR threshold.

Want to Review Your Deal Structure?

If you're evaluating a rental property and want to understand how projected rent affects qualification, review our full DSCR Rental Loan guidelines here:

View DSCR Loan Programs

What If the Appraised Rent Comes in Lower?

This is where investors need to pay attention.

If projected rent comes in lower than expected:

DSCR may fall below required minimum
Loan amount may need to be reduced
Additional down payment may be required

Running conservative rent estimates before submitting an application can prevent surprises.

Do You Need a Lease at Closing?

Often, no.

Many DSCR programs allow closing without an executed lease if the appraisal supports market rent.

However:

Some lenders prefer a signed lease
Some programs require a lease for short-term rental loans
Reserve requirements may vary

Always confirm program structure before assuming projected rent alone is sufficient.

Common Mistakes Investors Make

Overestimating rental income
Using Zillow rent estimates instead of appraisal-level comps
Ignoring vacancy assumptions
Not factoring insurance and taxes accurately

Projected rent is powerful — but it must be realistic.

Bottom Line

Yes, you can often use projected rent to qualify for a DSCR loan.

But the number must be supported by a professional market rent analysis.

If you’re acquiring a vacant or newly renovated property, understanding how that rent will be calculated is critical to structuring the deal correctly.