The Vacant Refinance Rule: Seasoning and Lease Requirements

Rule

A vacant property is eligible for a refinance only if the borrower has owned the property for 6 months or less. If the property has been owned for more than 6 months, a signed, executed lease is required to proceed with a refinance.

Lendency Insight

This rule is designed to identify "stagnant" assets. If an investor has owned a property for over half a year and it is still vacant, it suggests there may be a problem—either with the property’s condition or the local rental market. A DSCR loan relies on the property’s ability to "pay for itself." If it hasn't found a tenant in 6 months, the "Debt Service Coverage" is technically zero. However, we offer a window of 6 months for "Delayed Purchase" or "Buy-and-Hold" investors who are finishing light renovations. Once you cross that 180-day mark, we need to see a signed lease to prove the property is a viable income-generator.

Common Scenarios & FAQs

• What if I just finished a 7-month renovation? You will need to secure a tenant and a signed lease before we can close your long-term DSCR loan.

• Can I use a "Market Rent" projection instead? If you have owned the property for less than 6 months, yes. After 6 months, the actual signed lease takes precedence.

• What if the tenant hasn't moved in yet? An executed lease with a future move-in date before the closing date is typically acceptable with evidence of deposit/rent receipt.

Key Definitions

• Seasoning (Ownership): The length of time a borrower has held the legal title to a property.

• Delayed Purchase: A refinance transaction that occurs shortly after a cash purchase, often used to "pull out" the initial capital.