Lease

A lease is a contract that gives a tenant the right to occupy a property for a set term in exchange for rent. For a DSCR loan, the lease is evidence of the rent in the numerator. Lenders read it alongside the appraiser's estimate of market rent.

On a purchase with no tenant in place, lenders generally rely on the appraiser's market rent schedule. On a property that is already rented, they look at the signed lease. Many lenders use the lower of the two, so a lease written above market will not lift the ratio by itself.

Short-term rentals have no traditional lease, so lenders that accept them usually ask for booking history or a third-party income estimate instead. Month-to-month tenancies are often accepted but may be treated more cautiously than a lease with time left to run.

Further reading: Lease on Wikipedia.