A fully furnished rental with no lease in place is treated as vacant on our DSCR program, even when the property is fully equipped, listed nowhere, and earning money every month. And if there is a lease, the qualifying rent reverts to market rent when the lease rent is higher — which strips the furniture premium out of the number that decides your loan.
Those are two separate rules doing two separate things. Owners tend to discover them together, at underwriting, after the appraisal has already been ordered. This page explains both, what a signed lease actually changes, and how to time an application if you run furnished rentals.
The two consequences, stated plainly
The furnished-property provision in our DSCR guideline is short. It does two things:
1. No lease in place → the property is treated as vacant. A 5% LTV reduction applies. There is also a condition attached: the property cannot be listed on any short-term rental website such as Airbnb or Vrbo.
2. Lease in place, and current rent is higher than market rent → revert to market rent. The rent you actually collect stops being the qualifying number.
Read those two bullets against each other and the shape of the problem appears. Without a lease, you take an LTV cut. With a lease, you keep your LTV but you lose the furniture premium from the qualifying rent. There is no version of the furnished file where the furnished economics carry through to the loan intact.
Consequence one: "furnished and occupied" is not the same as "leased"
The vacancy call is made on occupancy and lease status, not on whether the house has beds in it.
Our occupancy definition counts a property as occupied and leased based on how many units are occupied and leased — one unit on a single-family property, two on a two-family, two on a three-family, three on a four-family. Anything that does not meet that count is an unoccupied/unleased property. Furniture is not part of that test. Neither is a booking calendar, a cleaning schedule, or a corporate tenant who has been there three months on a handshake.
Unleased properties require a 5% LTV reduction, and the unit must be in lease-ready condition if vacant. The mechanics of that reduction — where it lands on the eligibility grid, how it stacks, and the purchase-versus-refinance question — belong to a separate page: [DSCR loan on a vacant rental property](/blog/dscr-loan-on-a-vacant-rental-property). Read that one for the LTV math. What matters here is that a furnished property with no executed lease lands in that bucket by definition, not by underwriter discretion.
That last provision is the one that costs furnished operators the most money, because their turnover is fast and their instinct is to keep the calendar flexible until the loan is close to funding. On a long-term-lease file that instinct is exactly backwards.
Consequence two: the furniture premium disappears from qualifying rent
This is the one that genuinely surprises people, because the money is real. A furnished two-bedroom leased to a traveling nurse at $3,000 a month is collecting $3,000. The appraiser's market rent for that same unit on an annual unfurnished lease might be $1,800. Underwriting uses the lower number.
The reason sits in the appraisal requirements, not in the furnished section. Market rent estimates must be based on an annual lease for residential purposes, on the applicable Fannie Mae form — FNMA 1007 for a one-family property, or FNMA 1025 plus form 216 for a two-to-four. And the guideline is explicit that short-term or specialized-use rental rates are not acceptable for use as market rent.
A furnished rate is a specialized-use rate. The 1007 the appraiser hands in is an unfurnished, annual-lease number by construction. So the qualifying rent on a furnished property is an unfurnished rent — the furniture premium is not disallowed so much as never measured in the first place.
The 10% allowance and why furnished files do not get it
There is a general rule in the DSCR gross rent requirements that softens the lease-versus-market comparison. Gross rent must come from the lesser of the lease agreement or the appraisal form, with one carve-out: when the lease is higher than market rent on the appraisal, the amount used for qualifying cannot exceed 10% over the appraised market rent. If the actual rent is above market but within that 10%, the lease amount can be used.
The furnished-property provision does not repeat that cushion. It says: if the property has a lease in place and current rent is higher than market rent, revert to market rent.
For most furnished operators the distinction is academic anyway. A furnished premium that is only 10% over unfurnished market rent is not a furnished business — it is a slightly nicer unfurnished rental. The operators who feel this rule are the ones running 50% to 90% premiums, and they are far outside any cushion.
Here is how the three cases separate:
| Situation | Rent collected | Appraised market rent | Qualifying rent |
|---|---|---|---|
| Unfurnished lease at market | At market | The 1007 figure | The lease amount |
| Unfurnished lease modestly above market | Up to 10% over | The 1007 figure | Lease amount permitted, capped at 110% of market under the general rule |
| Fully furnished lease well above market | Furnished premium | Unfurnished annual-lease figure | Reverts to market rent |
Descriptive only. The specific figures on your file come from your appraisal.
The practical effect on DSCR is direct. DSCR is gross rent divided by PITIA, using the note rate for the payment. Cut the numerator from the furnished rate to the unfurnished rate and the ratio moves by the same proportion. A file that pencils at 1.35 on collected rent may pencil at 0.81 on market rent, and 0.81 puts you into a different set of rules entirely.
Illustration with invented figures, shown to make the mechanic visible. Not a quote and not drawn from any real file.
What falls out of a low qualifying DSCR
Once the qualifying rent drops to unfurnished market rent, the rest of the file has to absorb it.
- DSCR below 1.0 is not permitted for vacant properties. On a two-to-four unit, the property must have at least 50% occupancy.
- DSCR below 1.0 is also not permitted for inexperienced investors or for portfolio loans.
- Reserves are 3 months PITIA for the subject property at DSCR of 1.0 or greater, and 6 months PITIA at DSCR below 1.0.
- A minimum DSCR of 1.25x is required on loan amounts under $150,000.
Stack the two furnished consequences and you can reach a dead end: a furnished property with no lease is vacant, a vacant property cannot go below 1.0 DSCR, and the qualifying rent that determines whether you clear 1.0 is the unfurnished number. That combination is why the sequencing below matters more on furnished files than on ordinary ones.
The listing condition, and where short-term sits
The furnished provision attaches a condition to the no-lease case: the property cannot be listed on any short-term rental website such as Airbnb or Vrbo.
That is not an arbitrary add-on. It is the boundary between two different treatments. A property being marketed on a short-term rental platform is being underwritten as a short-term rental, which is its own program with its own LTV ceiling, its own DSCR floor, its own reserve add-on, and its own income calculation. Being furnished and unlisted keeps you out of that lane.
There is a third lane as well: a lease shorter than 12 months on a property that is not listed on any short-term rental site. That case has its own LTV treatment, covered on [short-term lease under 12 months not listed on Airbnb](/blog/short-term-lease-under-12-months-not-listed-on-airbnb).
The third surprise: the furniture has no value in the transaction either
Furnished operators buying a turnkey furnished property run into a related provision on the collateral side.
Any personal property transferred with a property sale must be deemed to have zero transfer value, as indicated by the sales contract and the appraisal. If any value is associated with the personal property, the sales price and the appraised value must both be reduced by that personal property value for purposes of calculating LTV and LTC. Furnishings, fixtures and equipment are named explicitly in the personal property definition.
So a purchase contract that says $420,000 with $30,000 allocated to the furniture package does not buy you a $420,000 basis. Both the price and the value get reduced by the $30,000 for LTV purposes, and your down payment grows accordingly.
Between this rule and the market rent rule, the pattern is consistent. The program underwrites the real property on an unfurnished, annual-lease basis on both sides of the equation — value and income. The furniture business is real, and it is yours, but it does not travel into the loan file.
How to time an application if you run furnished rentals
The rules above are fixed. The sequencing is not, and sequencing is where most of the recoverable money is.
| Step | Do this | Why it matters |
|---|---|---|
| Before ordering the appraisal | Get a qualifying tenant signed and physically in the unit | A lease signed after the appraisal inspection is not accepted, and an unoccupied unit at inspection is deemed vacant |
| Before ordering the appraisal | Confirm the property is not listed on any short-term rental site | The furnished no-lease treatment is conditioned on it not being listed |
| While structuring the lease | Use a 12-month or longer term where the business allows it | Shorter terms move the file into a different LTV treatment |
| While structuring the lease | Confirm the tenant is an eligible tenant | No borrower, guarantor, affiliate, officer, director, executive employee, manager, or their family members may be the lessee |
| Before you rely on collected rent | Underwrite your own deal at unfurnished market rent | This is the number the file will use; run your DSCR on it before you spend money on third-party reports |
| On a furnished purchase | Handle the furniture allocation in the contract | Value assigned to personal property reduces both price and appraised value for LTV and LTC |
The single highest-value move on this list is the last-but-one: run your own numbers on the unfurnished rent before you order anything. If the file works at unfurnished market rent, the furniture premium is upside in your business that simply does not appear in the loan. If it does not work at unfurnished market rent, you have learned that for the cost of an honest estimate rather than for the cost of an appraisal, a credit pull and several weeks.
Lease requirements a furnished operator should check early
A lease only helps if it is a lease the program can use. Ours must be fully executed by both an eligible tenant and the borrower or guarantor as landlord, be in the name of the borrower/guarantor or their verified property manager as landlord, have a unit rental rate and terms consistent with rates and terms prevailing in the local market, be on a form customary to the area and compliant with applicable legal requirements including required disclosures, and cover 100% of the square footage of the applicable residential unit.
Furnished operators commonly use their own short-form agreements, corporate housing addenda, or platform-generated documents. Those are worth reviewing against this list well before an appraisal is ordered, because a document that does not qualify as a lease leaves you in the no-lease case regardless of the tenant living there.
Documentation, when there is no lease to produce
Where a lease is absent or stale, the rental receipt requirements come into play. No lease available requires 3 months proof of rental receipt. Month-to-month with no original lease available requires 3 months proof of rental receipt. An expired lease with no month-to-month language and no extension requires 3 months of rental receipts. A current lease, an expired lease with month-to-month language, or an expired lease with an extension or addendum showing a new rental rate all require no rental receipt.
Note that an original lease or a new lease with month-to-month terms is limited to 60% LTV. Furnished operators drift into month-to-month arrangements naturally, so this is worth checking against your actual paperwork rather than your memory of it.
Receipts document that money changed hands. They do not raise the qualifying rent above appraised market rent on a furnished property — the revert rule governs that regardless of what the receipts show.
What this page does not do
This page explains how our DSCR program treats a fully furnished property with and without a lease in place, and why the furniture premium does not carry into qualifying rent. It is not an approval, not a rate quote, not a commitment to lend, and not a scenario decision on your property.
It does not price your loan. LTV, rate, and eligibility depend on credit score, loan amount, unit count, loan purpose, property type and program-level restrictions that are outside this page's scope, and the LTV reductions discussed here apply against a grid this page does not reproduce.
It does not cover the mechanics of the vacant-property LTV reduction, which are on the linked vacant-property page, or the LTV treatment of short leases on unlisted properties, which is on the linked short-term-lease page. It does not cover the short-term rental program, which has its own income calculation, LTV ceiling, DSCR floor and reserve requirements.
It does not tell you whether furnishing your rental is a good business decision, and it does not address the tax treatment of furniture, depreciation on personal property, transient-occupancy or lodging taxes, local short-term rental ordinances, HOA restrictions on rental terms, or landlord-tenant law in your state. Those are questions for your attorney, your accountant, and your municipality — not for a lending guideline.
Finally, guidelines change. Everything here reflects our DSCR program guidelines, V28. Confirm the current treatment on your specific scenario before you make an irreversible decision about a lease, an appraisal order, or a purchase contract.
Guideline DSCR V28 · Reviewed August 31, 2026
Published September 1, 2026 · Updated September 1, 2026
How to use this guide
This article is educational guidance, not an offer or commitment to lend. Rules, property facts, credit, leverage, documentation, and full underwriting still control any actual scenario.