The Quick Read: The 1007 is an appraiser’s written opinion of what your rental should earn each month, and the lender uses it as the income side of the coverage test. It sits beside the value opinion in the same appraisal. Value drives leverage, and market rent drives coverage.
- The appraiser, not you, produces the 1007 figure, using comparable rentals and adjustments.
- On a tenanted property, programs typically use the lower of the signed lease and the 1007 market rent.
- A vacant property leans on the 1007 alone.
- Coverage is rent divided by PITIA, which is not the same as cash flow.
- Two to four unit properties use a different form, and short-term rentals use different support.
Most investors think of the appraisal as one number. It is two. The 1007 is the second one, and it is the one that quietly decides whether your coverage ratio clears the line.
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Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Oct 15, 2026
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Program parameters update from Lendmire’s centralized guideline source. Taxes and insurance are editable estimates.
As of Oct 15, 2026 · General Freddie Mac market benchmark, not a Lendmire loan offer. Rent, nightly rate, occupancy, taxes, and insurance are editable estimates. Short-term rental figures are estimates only and vary significantly by season, property type, management approach, and local short-term-rental rules — confirm local regulations before relying on them. 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.
What Is the 1007 Rent Schedule?
The 1007 is the Single-Family Comparable Rent Schedule. It is one joint form, called Form 1007 at Fannie Mae and Form 1000 at Freddie Mac. The Freddie Mac form describes its purpose as giving the appraiser a familiar format to estimate the market rent of the subject property. Fannie Mae’s hosted copy notes the appraiser prepares it as an attachment to the appraisal for a single-family investment property.
Two things follow from that. First, it is an opinion from a licensed third party, not a document you fill out. Second, DSCR loans borrow the form because it is the shared industry format for a rent opinion. They are not agency loans. No federal rule tells a DSCR lender how to use the number. That is program convention, and across the wholesale network Lendmire works with, the conventions are fairly consistent.
Key Terms Defined
DSCR (debt service coverage ratio): The qualifying monthly rent divided by the full monthly housing payment.
PITIA: Principal, interest, taxes, insurance, and any HOA dues. It is the payment side of the ratio.
1007: The appraiser’s single-family rent schedule, attached to the appraisal.
1025: The small residential income property report, used for two to four units.
Indicated monthly market rent: The rent the appraiser concludes the property would command on the open market.
LTV (loan-to-value): The loan amount as a percentage of the appraised value.
How Does Underwriting Use the 1007, Step by Step?
Underwriting uses the 1007 in five steps: order the appraisal, build the rent opinion, select the rent, compute coverage, and test leverage. The appraisal does two jobs. It sets value, which drives LTV, and it sets market rent, which drives the coverage ratio.
1. The lender orders the appraisal. For a one-unit property, that means the standard report with the 1007 attached.
2. The appraiser builds the rent opinion. The form is laid out with three comparable rentals side by side. Each lists its distance from the subject, lease dates, monthly rent, and utilities. The appraiser then adjusts each comp for items such as concessions, location, design, age, condition, room count, and living area. The form text says adjustments belong only where there are significant differences from the subject. Each comp ends with an indicated rent, and the appraiser reconciles them into one final figure.
3. The appraiser adds commentary. The form asks for the range of rents, a vacancy estimate, the rent trend, and support for the adjustments.
4. The lender selects the rent. Most programs we place files with use the lower of the signed lease and the 1007 market rent when a lease exists. With no lease, the 1007 stands alone.
5. The lender computes coverage and tests leverage. Rent divided by PITIA gives the ratio. Meanwhile the value opinion sets LTV against the program’s caps.
On purchases, most files land at 75% to 80% LTV on an investment property. Select high-leverage programs reach 85% with roughly a 700-plus score. Cash-out refinances top out around 75% on standard rentals, and about six months of seasoning is the common expectation. All of that is subject to lender guidelines.
Which Form Applies to Which Property?
One-unit properties use the 1007. Two-to-four unit properties use a different report, so the 1007 never applies there.
| Property | Typical rent support | Note |
|---|---|---|
| Single-family | 1004 plus 1007 | Standard pairing |
| 2-4 units | Form 1025 (sometimes 216) | Not a 1007 |
| Condo | Condo report plus 1007 | Lender-specific |
| Short-term rental | Separate market-data schedule | Lender-specific |
| Vacant one-unit | 1007 alone | No lease to compare |
This pairing is not unique to DSCR. HUD’s rental-income guidance pairs a one-unit appraisal with the 1007 and two-to-four unit properties with the 1025. That shows how broadly the forms are used as an industry standard. It does not mean agency rules govern your DSCR file. They don’t.
Lease vs. Market Rent: Which One Counts?
Under the lower-of convention, the smaller of the lease rent and the 1007 market rent becomes qualifying income. Check your program’s guidelines, but this is the common approach across the network.
| Situation | Rent that typically counts |
|---|---|
| Vacant | 1007 market rent |
| Lease at market | Either; they match |
| Lease below market | The lease |
| Lease above market | Market rent caps it |
| Month-to-month | Varies by program |
Two consequences matter. A lease above market adds nothing to your ratio. A stale lease below market drags it down. If a long-time tenant is paying well under today’s rents, renewing at market before you apply can change the math. Some programs lean more on actual rent, so ask which approach your target program takes.
What Does a Low 1007 Do to the Deal?
A low 1007 shrinks the coverage ratio, and that can reduce proceeds or change the program you fit. The appraiser’s number overrides your pro forma.
Picture a rental you modeled at a comfortable 1.15x using an assumed rent. The appraisal returns a market rent about 10% lower. Coverage falls to roughly 1.03x, which is thin. A slightly larger drop and it sits just under 1.00.
Here is the fix list, in order:
- Check the comps for errors, such as wrong unit size, wrong condition, or comps from a different rental market.
- If relevant comparable leases were missed, submit them with evidence through the lender’s review channel. The appraiser’s opinion stays independent, so expect a review, not a promise.
- Consider a larger down payment. It lowers the payment and can lift the ratio, but it never erases leverage caps, credit floors, or reserve rules.
- Look at structures. A 40-year term or an interest-only period, available through select lenders in the network, can improve coverage.
- Consider a separate path. 1.00 is where many select programs start. Coverage below 1.00 is available through select lenders in the network, with leverage and terms adjusted.
Lendmire’s piece DSCR Loan Denied Because The 1007 Rent Schedule Came In Too Low walks through the denial scenario in more depth. Another honest option is walking away. A deal that only works at a rent the market won’t support is a weak deal.
DSCR vs. conventional financing
There are two common ways to finance an investment property, and 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.
Where Does the General Rule Break?
The lower-of rule bends in a handful of named situations.
Short-term rentals. The 1007 is built on monthly lease comps. Multiplying a nightly rate by 30 does not produce market rent. STR programs use separate market data and different terms: purchases go to 75% LTV, refinances to around 70%, and cash-out to 70%. Expect a 640-plus score and about 12 months of hosting history. Coverage floors are 1.00 on purchases and refinances. 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. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
By-the-room rentals. Per-room income is generally not what qualifies. Where a program allows the property at all, it typically is reviewed on long-term market rent, which runs well below the sum of the rooms.
Vacant at purchase. The 1007 alone sets the rent. You don’t need a lease to start the coverage test.
Ineligible property types. Manufactured homes (single- and double-wide), log homes, and barndominiums are not offered in these programs, no matter what the rent schedule says.
Does the Coverage Ratio Equal Cash Flow?
No. DSCR compares rent to PITIA only. Clearing 1.00 does not mean positive cash flow, because repairs, vacancy, management, utilities, and capex all sit outside the calculation. A property at 1.05x can still lose money in a bad year.
For that reason, the strongest files clear two tests: enough equity and enough rental coverage. Reserves matter too. They are commonly around six months of PITIA, with about nine months on loans above $1,500,000, though conservative rate-term files at modest leverage can see reserves waived. Credit tiers run from a 620 floor in parts of the network to roughly 660 on most programs, with 700-plus unlocking the strongest leverage. These are typical ranges and vary by lender and file.
How to Prepare Before the Appraisal
- Underwrite your own deal on conservative rental comps before you apply, and treat the quote’s rent as an estimate until the appraisal replaces it.
- Renew any stale below-market lease at market rent first.
- Gather your lease, proof of rent payment, and a list of recent improvements for the appraiser.
- Keep the PITIA components handy: taxes, insurance, and HOA dues all change the ratio.
Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
For the wider picture of how programs fit together, see Lendmire’s complete DSCR loans guide. For the ordering side, Lendmire’s article The DSCR Appraisal: 1007 Rent Schedules, Comps, and What Gets Ordered covers the mechanics.
Is the Form Changing?
The rent-opinion function is not going away, but the packaging is shifting. The Appraisal Institute reports that Fannie Mae and Freddie Mac will stop accepting the current URAR in favor of a redesigned report built on UAD 3.6. That is an agency change. DSCR loans sit outside agency eligibility, so how non-QM lenders order and label rent opinions may evolve on its own timeline. Expect the appraiser’s market-rent conclusion to continue, whatever the form is called.
Frequently Asked Questions
Does a DSCR loan always require a 1007?
Usually, on a one-unit property, because the lender needs an independent rent opinion. Two-to-four unit properties use the 1025 instead, and short-term rentals use separate market data. Requirements vary by program and property.
Can I use my own rent estimate or an online estimate?
No. The qualifying figure comes from the appraiser’s schedule, supported by comps and adjustments. Your estimate is useful for screening a deal, but it is not what the lender uses.
Does an above-market lease help my ratio?
Typically not. The market rent caps what counts, so a lease above it adds nothing. A below-market lease, on the other hand, usually controls and lowers the ratio.
Do I need a lease to close on a vacant property?
On many programs, no. The 1007 market rent stands alone for a vacant property. Confirm the specifics with the program you are targeting.
Why did my quote change after the appraisal?
The quote usually rests on an assumed rent. Once the appraisal documents market rent, that number replaces the assumption, and the ratio moves with it. Value can shift as well, which affects leverage.
If you are buying or refinancing a rental property and want to see how the numbers work, Lendmire can help you compare DSCR loan options based on the property income, credit profile, leverage, and investor goals. Programs are arranged through select lenders in a wholesale network across 41 markets, including Washington, D.C., and every file is subject to lender guidelines and review. This is not a commitment to lend.
About Lendmire
A non-QM mortgage broker (NMLS# 2371349), Lendmire arranges DSCR financing for real estate investors in 41 markets — 40 states plus Washington, D.C. Because deals are underwritten primarily on property cash flow rather than personal income documentation, the structure suits self-employed buyers and entity-owned portfolios. Lendmire places loans through wholesale investor lenders; it is not a direct lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Freddie Mac Form 1000 / Fannie Mae Form 1007
2. Fannie Mae Form 1007 (hosted copy)
3. Appraisal Institute: The New URAR Rollout Has Begun
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Compare DSCR Loan Quotes From Three Lenders · How Much You Can Borrow for a DSCR Loan on Multifamily 5+ Properties? · Interest-Only DSCR Loan vs. 1099-Only Loan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- 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.