How To Order A Short-term Rental Rent Analysis On A DSCR Purchase Appraisal — The Quick Read: Ordering this correctly means telling the appraiser, in writing, that you need two separate deliverables — a standard rent-comparable form for the real property and a distinct narrative addendum for short-term rental income. Skip the second piece and the appraisal comes back with long-term-lease rent that will understate what the property actually earns. On a purchase transaction, that narrative income opinion is often the number that decides whether the DSCR file clears at full leverage or gets pushed to a reduced-leverage path.
Why This Trips Up So Many Purchase Files
Buyers assume the appraiser just “does the Airbnb math.” That’s not how it works, and it’s the single biggest reason STR purchase files come back with a number that doesn’t match reality.
Short-Term Rental Calculator
Run the STR numbers in your market
Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Sep 17, 2026
Prefilled with local estimates — enter your nightly rate, occupancy, taxes, and insurance for a more accurate picture.
Short-term rental income is documented with a 12-month history or a market data report. Program parameters update from Lendmire’s centralized guideline source.
As of Sep 17, 2026 · General Freddie Mac market benchmark, not a Lendmire loan offer. Nightly rate, occupancy, taxes, and insurance are editable estimates. Qualifying income for short-term rentals varies by program — some use appraisal market rent, others use documented STR history or projections — and is confirmed in underwriting. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
Form 1007, the Single-Family Comparable Rent Schedule, was built to estimate monthly rent from long-term lease comparables. It was never designed to touch nightly rental income. Fannie Mae’s appraiser guidance states plainly that it would be incorrect for an appraiser to take a nightly short-term rate, multiply it by 30, and call that the monthly market rent — that shortcut ignores furniture and fixtures, vacancy swings, and the operating expenses a nightly rental carries that a leased home doesn’t.
So when a lender orders “a 1007” on a short-term rental purchase and stops there, the appraiser has two choices: decline the STR income piece entirely, or produce a report that leans on long-term comps a nightly rental was never going to command. Either way, the borrower’s qualifying income comes in low — sometimes low enough to knock the coverage ratio below what full leverage requires.
Key Terms Defined
Form 1007 — the standard appraisal form used to estimate monthly market rent on a single-family or condo investment property, based on comparable long-term leases.
Form 1025 — the parallel form used for 2-4 unit properties; same long-term-lease logic, applied to small multifamily.
Narrative addendum — a separate, appraiser-written report (often titled “Short-Term Rental Projected Income Analysis”) that develops an STR income opinion using nightly-rate data, occupancy patterns, and market-specific comparables — because no standardized government form exists for this.
Going-concern analysis — the appraisal framework used when a property’s value includes furnishings and an operating business, not just real estate — which is how appraisers are trained to think about an active short-term rental.
What The Order Actually Needs To Say
The order needs to explicitly scope the STR income analysis as a separate deliverable — not assume it’s implied by requesting a rent schedule.
So the engagement letter or appraisal order should state, in plain language, that the assignment includes two things: the standard comparable-rent form for the subject property type (Form 1007 for a single unit, Form 1025 for 2-4 units), and a distinct, clearly labeled narrative addendum addressing short-term rental income. Class Valuation’s guidance on this matches what shows up across the appraisal trade press: consistency on STR work comes from clear engagement instructions, not from trying to force STR income into a form that wasn’t built for it.
Practically, the order should ask for:
- A market-supported occupancy rate for the subject’s specific submarket, not a citywide average
- Seasonal pricing patterns reflected in the nightly-rate comps, not a flat annualized rate
- A defined set of comparable STR listings, cross-checked against booking-platform data
- Transparent expense assumptions built into the income opinion, not gross revenue reported as rent
- A statement on the property’s current legal status for short-term use in that specific location
That last point matters on a purchase specifically. Appraisers are increasingly expected to note the STR’s legal standing as part of the analysis, and the appraiser isn’t the party who decides local legality — that’s confirmed for the specific address, not assumed from the city or state.
Why This Requires A Specific Kind Of Appraiser
Not every licensed appraiser can — or will — take this assignment, and that’s worth planning around before the order goes out.
Valuing an active short-term rental works like a going-concern problem. The appraiser must separate what the real estate is worth from what the furniture, fixtures, and the operating business add to total income. Tennessee’s Appraiser Commission FAQ ties this to USPAP’s Competency Rule. Using STR comparables without isolating the real-estate-only piece can break professional standards — it’s not just a stylistic choice. Competency isn’t about how long someone has held a license. It’s about whether that specific appraiser has done this specific kind of analysis before.
That’s part of why some appraisers decline STR assignments outright rather than risk a report that gets challenged later. If the order goes out to an appraiser without that background, the file can stall on a re-order rather than a revision — worth knowing before a purchase timeline gets tight.
What Happens When The Appraisal Comes Back Low
If the narrative addendum lands with a conservative occupancy assumption or discounted nightly rate, the coverage ratio on the file tightens — and that changes what leverage is available, not whether the deal can close at all.
Across the wholesale network Lendmire works with, short-term rental purchase files generally qualify using the appraisal’s short-term-rent analysis discounted to 80% of gross projected income, and that’s reserved for investors who’ve owned income-producing property within the trailing thirty-six months. Coverage at 1.00 or better on that basis lines up with full leverage on the standard ladder; loans below the $1,000,000 threshold generally see purchase leverage up to 80% at a 660-plus credit profile, stepping down as loan size grows — 75% purchase leverage in the $1,000,000 to $2,000,000 range at higher credit tiers, and lower still above $3,000,000, always reviewed case by case above $4,000,000. Short-term rental files specifically cap at a $2,000,000 loan amount regardless of leverage tier.
When the appraisal comes back thin, a handful of lenders in the network will still review the file below a 1.00 coverage ratio. But LTV and terms adjust accordingly, subject to underwriting. That’s a real path, not a guarantee — and it’s never a no-ratio scenario for short-term rentals specifically. No-ratio programs top out at the same $2,000,000 ceiling, but they require a seven-year clean housing history and a specific pay history profile. They run on a different track than STR income qualification altogether.
An investor facing a marginal STR appraisal really has two options worth weighing side by side. They can push for an appraisal reconsideration with stronger STR comps, or accept the reduced-leverage path a select lender offers on the file as ordered. Neither choice is automatically better. It depends on how much equity the investor brings and how confident they are that the comps were genuinely light — rather than the property genuinely underperforming.
Purchase Versus Refinance: Different Evidence, Different Weight
A purchase file has no operating history to point to — that’s the core reason this whole process exists on a purchase and works differently on a refinance.
There’s no seller-provided booking history for the buyer’s future operation of the property, so the file leans entirely on the appraiser’s STR income opinion and third-party market data. AirDNA is the tool most commonly referenced in appraisal practice for this. A refinance, by contrast, can point to twelve months of the current owner’s actual short-term rental performance — trailing income that carries real underwriting weight because it’s documented, not projected.
Lendmire’s network draws that same line. Short-term rental income on a refinance can qualify using twelve months of documented operating history. A purchase, though, relies on the appraisal’s rent analysis at 80% of gross. That distinction is worth knowing before assuming a purchase file will qualify the same way a refinance on a comparable property might.
DSCR vs. conventional financing
Two common ways to finance an investment property in this market. They qualify you differently — here’s how investors weigh them.
Why investors choose it
- Qualifies on the property’s rental income — no personal tax returns, W-2s, or pay stubs needed to document income.
- No personal debt-to-income ceiling to clear, so existing mortgages and obligations don’t cap your borrowing the same way.
- Can be closed in an LLC, keeping the property inside a business entity.
- Built for scaling — not held to the limit on number of financed properties that conventional financing applies.
- Underwriting centers on the deal: generally qualifies when the rent covers the payment, a 1.00x coverage ratio being a common baseline (confirmed in underwriting).
- Designed specifically for investment property, including long-term and, where the program allows, short-term rentals.
Where it’s strong
- Often the lowest ongoing financing cost for a buyer who fully qualifies on personal income — a fit for a first property or a cost-first purchase.
Trade-offs for investors
- Requires full personal income documentation and must fit within a debt-to-income limit — salary, existing debts, and other mortgages all count.
- Typically held in your personal name rather than a business entity.
- Caps how many financed properties you can carry, which can become a ceiling as a portfolio grows.
- Evaluates you as a borrower as much as the property, which usually means more paperwork.
How investors usually choose: a first or single property often optimizes for the lowest financing cost; portfolio builders often optimize for leverage, vesting in an LLC, and scaling past conventional caps. The right answer depends on your goals, the property, and current guidelines — both paths run through select lenders in Lendmire’s wholesale network, with eligibility and terms confirmed in underwriting.
What Happens After UAD 3.6
Form 1007 itself is being phased out, and the narrative-addendum approach isn’t going anywhere when that happens — if anything, it becomes more central.
HousingWire’s coverage reports that UAD 3.6 will retire legacy appraisal forms, including Form 1007, replacing them with a standardized data structure — but narrative addenda will remain the primary way STR income gets supported. That means the ordering discipline covered here — spec the STR analysis explicitly, don’t assume it’s bundled into a rent schedule — carries forward regardless of which base form the industry eventually settles on.
DSCR loans are business-purpose loans for investors. Lenders review them differently from a standard owner-occupied mortgage. That’s a big reason why property income — not the borrower’s traditional personal-income paperwork — drives the file. For a fuller walkthrough of how qualification works, check Lendmire’s complete DSCR loans guide. It covers the mechanics from start to finish. The rent analysis piece on short-term rental leverage digs deeper into how the discounted income figure turns into an actual loan amount.
Short-term rental rules can vary by city, county, HOA, and property type, so investors should confirm local rules before relying on projected rental income. This article is for general information and isn’t legal or tax advice; investors should talk with a qualified attorney or CPA about their own situation before making a purchase decision.
Frequently Asked Questions
Does the STR narrative addendum replace Form 1007 on a purchase appraisal?
No. The narrative addendum supplements the standard form; it doesn’t replace it. Form 1007 (or Form 1025 on a 2-4 unit) still establishes the real-property comparable-rent picture, while the narrative addendum separately develops the STR income opinion. Both pieces need to be part of the order.
Can an appraiser just decline the STR portion of the assignment?
Yes, and it happens more than buyers expect. Appraisers without documented short-term-rental valuation experience can decline rather than risk producing a report that doesn’t hold up to competency standards, which is why vetting the appraiser’s STR background before ordering saves a re-order later.
What income figure does Lendmire’s network use for a short-term rental purchase?
Generally 80% of the gross projected income shown in the appraisal’s short-term-rent analysis, reserved for investors with prior income-property ownership in the trailing thirty-six months. That figure feeds the DSCR coverage calculation the same way a long-term lease rent would on a standard rental purchase.
What if the appraisal’s STR income comes back too low to hit 1.00 coverage?
A handful of lenders in the network will still review files below 1.00 coverage, but leverage and terms adjust, subject to underwriting. An appraisal reconsideration with stronger STR comparables is the other option, and which path makes sense depends on the specific file.
Does a refinance need the same appraisal STR analysis as a purchase?
No. A refinance can qualify on twelve months of the current owner’s documented short-term rental operating history rather than an appraiser’s projected income analysis, since there’s actual performance data to point to instead of a forward-looking estimate.
Investors focused on short-term rentals can review DSCR loans for Airbnb and short-term rentals.
For current guidelines and terms, see Lendmire’s super jumbo DSCR loan programs page.
Self-employed borrowers can compare both super jumbo programs on Lendmire’s self-employed mortgages page.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage focused on investor financing, arranging DSCR loans in 39 states plus Washington, D.C. — 40 markets total. Qualification is based on the property’s income rather than personal income documentation, subject to lender guidelines, making it a fit for LLC-held rentals and scaling portfolios. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your home or investment property. No commitment required.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. Fannie Mae Appraiser Update (Short-Term Rentals and Form 1007)
2. Class Valuation’s guidance on this
3. Tennessee Commerce Dept. — Short-Term Rental FAQs
4. HousingWire — Short-term rentals are breaking the appraisal playbook
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.
