Review the lease. Then review the loan
For a leased rental, the file starts with the lease: what it says, what it supports, and what the lender's ratio counts against it.
Business-purpose investment financing. Stonehaven Lending is a mortgage brokerage. Subject to lender underwriting, documentation, valuation and program availability. Preliminary review is not approval or a commitment. NMLS #1752355.
For long-term rentals, DSCR programs size eligible rent, typically the lower of the lease or the appraiser's market analysis, against the qualifying payment (PITIA). The relevant limitation, stated where it belongs: management fees, maintenance and vacancy are typically not in the residential qualification ratio, but they are absolutely in your ownership economics. A loan can qualify while the operation underperforms; review both.
An illustrative leased-rental review
An owner refinances a rental leased at $2,350 where the appraiser's market analysis says $2,150. Under common program treatment the lower figure drives the ratio, which changes leverage and proceeds versus the owner's expectation. Meanwhile professional management takes its percentage of the actual $2,350 every month. Illustrative example, not a customer.
Neither number is wrong. They answer different questions, and the review keeps them straight.
Where the leased long-term rental sits well
A stabilized lease with market-supported rent is the cleanest DSCR evidence there is, which is why long-term rentals are the product's home ground. Conventional financing also recognizes rental income under its own rules and can price well; the comparison stays worth running.
Where the lease is above market, expect the market figure to govern qualification. Where it is below market, the lease may govern instead. The direction of the gap shapes the whole file.
Lease and expense checklist for the review
What a complete long-term rental file looks like before anyone applies:
The lease itself
Term, rent, concessions, deposits and any options. Month-to-month versus term leases can be treated differently by programs.
Rent support
How the lease rent compares with the appraiser's likely market analysis. A large gap in either direction is a finding, not a footnote.
Payment reality (PITIA)
Current taxes as they will be assessed, an actual insurance quote, and association dues if any.
Operating ledger
Management percentage, recent maintenance history, vacancy pattern. Outside the ratio, inside your return.
Tenancy quality
Payment history and time in place. Underwriting may not price it, but your risk assessment should.
Beyond the ratio
Rental income treatment is one input. These commonly shape eligibility and terms as well:
- Eligible rent treatment: lease versus market analysis per program
- Lease form and term rules
- Property condition and appraisal results
- Credit, leverage and reserves as everywhere
- Ownership vesting if held in an entity
Asked before anyone proceeds
My lease is above market; will I get credit for it?
Commonly the ratio uses the lower of lease and market analysis, so above-market rent may not fully count for qualification, even though you actually collect it. Plan leverage on the counted number.
Management eats my margin; does the lender care?
Typically not in the residential ratio, which is exactly why you should: the loan can qualify while your net after management and maintenance disappoints. The review shows the owner column too.
How the preliminary review works
Send the scenario
Property numbers, rough credit picture, cash position and timing. Estimates are fine to start; no SSN is collected at this stage.
Compare the paths
A licensed specialist reviews the scenario and compares the financing structures that actually fit it, including when a different product or waiting is the better answer.
Underwriting decides
If you proceed, a lender underwrites the full file. A preliminary review is analysis, not approval, and no closing timeline is promised here.
Put the scenario in front of a specialist
Rough numbers are enough to start. The review compares the paths that actually fit, and says so when a different one wins.
Business-purpose investment financing. Stonehaven Lending is a mortgage brokerage. Subject to lender underwriting, documentation, valuation and program availability. Preliminary review is not approval or a commitment. NMLS #1752355.
Specific to this situation
Does a month-to-month tenancy hurt the file?
Programs vary in treating month-to-month versus term leases; some weigh the market analysis more heavily. It is a program fact to check rather than a general rule.
What if the property is between tenants?
Some programs consider rent-ready vacant properties on the appraiser's market rent; a signed lease is stronger evidence. For 1-4 unit refinances, vacancy rules vary by program and are worth confirming early.
Do utilities or landlord-paid services change the ratio?
The standard residential ratio centers on rent against PITIA; landlord-paid operating costs sit outside it but squarely inside your cash flow. List them anyway; the review reads both columns.
Will a rent increase mid-process help?
Underwriting uses the documented evidence at review time under program rules; a new lease can change the file if timing permits. Do not build the plan on rent that is not yet on paper.
Is my long-term rental better refinanced conventionally?
Sometimes, particularly for strong personal-income files. The comparison is total cost under both paths, and the review should name the winner for your numbers.