The Quick Read: A low 1007 usually means the lender measured the wrong thing, not that the property failed. The 1007 is the appraiser’s opinion of monthly long-term rent, and a nightly-rate business does not earn like a long-term lease. You can often recover the file by switching the income basis, correcting errors, contesting the number properly, or resizing the loan, in that order.
- Find out which number missed: the rent, the value, or both.
- Ask whether the program can count your booking history instead of the 1007.
- Contest the number only when you have real evidence, such as comp errors or factual mistakes.
- Consider resizing the loan, which lowers the debt the rent has to cover.
- Walk away when no fix restores coverage at leverage you can live with.
Why Does a 1007 Undercount a Short-Term Rental?
Because the form was built for long-term leases. Fannie Mae’s Form 1007 is the Single-Family Comparable Rent Schedule. Lenders use it to get a market rent for a single-family investment property from the appraiser. The form also says adjustments belong only to items of significant difference between the comparables and the subject.
Fannie Mae has said the form documents monthly market rent, and that it is required only when rental income is used to qualify a one-unit investment property. That is in its statement on short-term rentals and Form 1007. DSCR loans are not agency products. Non-QM appraisal panels simply borrow the form.
A valuation-industry explainer from Class Valuation makes the same point. It says leaning on the 1007 for DSCR analysis often produces an artificially low ratio that does not reflect real STR performance.
So when the number lands low, ask whether the problem is the property or the method. Those need different fixes.
Key Terms Defined
Form 1007: the appraiser’s rent schedule for a single-family home. For 2-4 units, the rent analysis sits inside a different form, the 1025.
DSCR (debt service coverage ratio): the monthly rent divided by the monthly PITIA. Above 1.00 means the rent covers the payment on paper.
PITIA: principal, interest, taxes, insurance, and association dues. It is the full monthly obligation the ratio is tested against.
Reconsideration of value: a formal request, routed through the lender, asking the appraiser to review the conclusion using new evidence.
Trailing income history: your actual platform payouts over a past stretch, typically 12 months.
Narrative addendum: a written explanation the appraiser attaches to the report to support a conclusion the form alone cannot.
What Actually Happened to Your File?
Start with a diagnosis. Rent misses and value misses hurt differently, and the fix depends on which one you have.
| Miss | What it changes | What helps |
|---|---|---|
| Rent only | Coverage ratio drops | Income-history program, rent comps |
| Value only | LTV math, loan amount | Reconsideration, more cash, price talks |
| Both | Ratio and loan size | Program change first, then resize |
Ask your loan officer for four things: the rent figure the lender is using, the PITIA components, the resulting ratio, and the exact shortfall to the program minimum. Then get the full appraisal report, not a summary. Without those numbers you are guessing.
What Should You Do First?
Work through these steps in order.
1. Get the complete appraisal and read the comp list, the property description, and the rent conclusion.
2. Check for factual errors: wrong bedroom or bath count, wrong square footage, missing features, an unusable comp.
3. Confirm which income basis your program uses. Many lenders count long-term rent from the appraisal on STR files. Others work from booking history or a third-party STR market report.
4. Check your contract and lock deadlines. Appraisal disputes eat time, and a lapsed deadline can cost you more than the rent miss did.
5. Decide whether this is a method problem or an evidence problem before you write anything to anyone.
The Fix Ladder, Lightest to Heaviest
Try the lighter fixes first. Each one costs less than the one below it.
| Fix | What it changes | Trade-off |
|---|---|---|
| Switch income basis | Ratio uses STR income | Needs history or an accepted report |
| Correct documented errors | Rent or value conclusion | Only works if errors exist |
| Request reconsideration | Appraiser’s opinion | Appraiser may hold the number |
| Resize the loan | Lowers PITIA | More cash at the table |
| Add cash | Lowers loan amount | Does not lift eligibility on its own |
| Restructure terms | Lowers monthly obligation | Terms vary by lender |
| Change lenders | New program, new basis | Fees, timing, a possible new appraisal |
| Walk away | Ends the deal | Contract rights and deposits matter |
The biggest lever is the first one. Across the wholesale network Lendmire works with, programs differ on how they count STR income. Moving the file to a program that reads your booking history, instead of the appraiser’s long-term opinion, can change the ratio more than any argument with the appraiser.
How Do You Build the STR Income Packet?
Assemble documents that show what the property actually earned. Short-term rental programs in the network typically expect about 12 months of host experience, so existing hosts usually have material to work with.
- Platform payout statements covering the trailing 12 months.
- A third-party STR market report, where the program accepts one.
- Any lease or management agreement, plus entity documents, reserve evidence, and insurance.
- A short note explaining seasonality, such as a slow winter and strong summer.
Show the full year, not a hand-picked peak. Lenders discount cherry-picked months, and a clean year with visible seasons reads as honest income. Listing screenshots and nightly-rate math are not income evidence.
A vacant or new purchase is the hard case. With no history, a projection or the appraiser’s opinion carries everything. Expect fewer options and be ready to resize.
A Worked Example
These are modeled assumptions, not market data. Say a quote was built on STR income and showed coverage near 1.20x. The 1007 comes back and the same loan now reads about 0.85x.
To get back to 1.00x on that rent, the monthly obligation must fall roughly 15%. Here is the catch. Taxes, insurance, and association dues do not shrink when you borrow less. Only principal and interest fall with the loan amount. So the loan must shrink by more than 15% to get there.
Now run it the other way. If the program counted a documented year of bookings, that same property might read well above 1.00x with no change in the loan. Same house, same borrower, different income method. This is why matching the property to the program before the appraisal is the main protection.
Clearing 1.00x also does not mean the property cash flows. DSCR compares rent to PITIA only. Repairs, vacancy, management, utilities, and capex sit outside the calculation, and STRs carry more of those than most long-term rentals.
Should You Contest the Number?
Only when you have evidence. There are two kinds of dispute, and they get different results.
A comp-error dispute says the appraiser used bad data: a comp that is not comparable, a wrong feature count, or a missing amenity. This one can win. AppraisalReports.com notes that an appraiser typically analyzes about three nearby rentals. With a sample that small, one bad comp moves the conclusion.
A method-mismatch dispute says the form does not capture STR income. That argument is true, but a reconsideration will rarely fix it. The appraiser is still estimating long-term rent. Use that argument to justify switching programs, not to ask the appraiser to inflate a number.
What to include in a reconsideration request:
- Specific comps with leases or listings, and why each is comparable.
- The factual errors you found, with proof.
- Nothing about your nightly rates, your platform income, or your target ratio.
Send it through the lender, never to the appraiser directly. Contact outside the lender’s channel can hurt the file. For more on denial scenarios, see Lendmire’s article DSCR Loan Denied Because The 1007 Rent Schedule Came In Too Low.
What Do Purchase and Refinance Files Do Differently?
On a purchase, the contract is your pressure. You may have price renegotiation, a financing contingency, and a deadline. A low rent figure can justify a conversation with the seller, though a lower price alone does not fix the ratio. Price changes the loan amount, but taxes, insurance, and dues stay close to where they were.
On a refinance, you control the timing. You can shrink the cash-out request, wait, or collect more booking history first.
| Factor | Purchase | Refinance |
|---|---|---|
| Leverage on an STR investment property | Up to 75% LTV on the strongest files | Up to 70% LTV on STR collateral |
| Coverage floor | 1.00 | 1.00 |
| Main pressure | Contract deadlines | Little, so more room to wait |
| Main fix | Resize, renegotiate, switch | Resize proceeds, switch income basis |
These figures reflect typical wholesale-network guidance, and each file is underwritten individually, subject to lender guidelines. STR files also typically want a 640 or better credit score. Loan amounts run up to $3,000,000 on standard programs.
Does More Cash Down Save the Deal?
Sometimes, but only for the right reason. A larger down payment lowers the loan, which lowers the monthly obligation and can lift the ratio. It never erases leverage caps, credit floors, reserve rules, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.
Coverage below 1.00 is a separate path. It is available through select lenders in the network, with leverage and terms adjusted. Expect lower leverage and different pricing. It is an option to review, not an assumption.
Some lenders in the network also offer longer terms or interest-only periods that lower the monthly obligation. Terms differ by lender, and you should price them before you count on them. 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 a related scenario where the appraisal drags down the ratio, Lendmire’s guide Low DSCR After Appraisal: Five Ways Investors May Still Save The Deal walks through more resizing options. The complete DSCR loans guide covers the program basics.
What Mistakes Sink These Files?
- Multiplying the nightly rate by thirty and calling it market rent. The 1007 does not work that way.
- Treating a third-party STR report as the same document as the appraiser’s rent schedule. They are different, and lenders pick one.
- Appealing to the appraiser directly.
- Letting contract or lock deadlines lapse while you argue.
- Ordering a second appraisal under the same income basis. It may give you the same answer and cost you another fee.
- Relying on projected income without checking local rules. 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.
When Should You Walk Away?
Walk when the lighter fixes are gone and the file still fails. Use this short test:
| Situation | Move |
|---|---|
| Program can count booking history | Switch and re-run the ratio |
| Clear comp errors in the report | Request reconsideration |
| Ratio fixable by resizing, cash is available | Resize, then confirm coverage |
| Ratio fixed only at leverage or cash you will not commit | Walk |
| Vacant, no history, appraisal is the only evidence | Resize or walk |
A form change may be coming at some point, since appraisal formats can shift over time. Nothing is confirmed, so ask the lender which form it will order on your file.
Frequently Asked Questions
Can I make the appraiser use my booking income?
Not through the 1007. The form estimates monthly long-term rent. Your booking income belongs in a different income method, so look for a program that counts trailing statements or an accepted third-party STR report.
Does the lender have to use the 1007?
No. Fannie Mae owns the form, and DSCR loans are not agency products. Many STR programs count booking history or a market report. Which one your lender uses is the first thing to confirm.
Will a second appraisal help?
Only if the first has errors or weak comps. A second appraisal under the same long-term rent method will usually estimate long-term rent again. Switching to an income-based program is the stronger move.
Does a lower purchase price fix the ratio?
It helps, but less than you would hope. A lower price shrinks the loan, but taxes, insurance, and dues do not move with it. You may need to cut the loan by more than the shortfall percentage.
What if the property is vacant?
Vacant and new purchases have no operating history, so a projection or the appraiser’s opinion carries the file. Options narrow. Expect to resize, bring more cash, or look for a lender that accepts a market projection, subject to lender guidelines.
If you are buying or refinancing a rental property and want to see how the numbers work, Lendmire, a DSCR-focused mortgage broker arranging investor loans across 41 markets including Washington, D.C., can help you compare DSCR loan options based on the property income, credit profile, leverage, and investor goals. Reach the team at 828-256-2183. This is not a commitment to lend.
About Lendmire
Lendmire (NMLS# 2371349) is a DSCR-focused mortgage broker that helps arrange investor financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR eligibility is generally reviewed by the lender around the property’s rental income rather than personal income documentation, subject to lender guidelines — which works for self-employed investors, LLC operators, and portfolios above four financed properties. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
2. Fannie Mae statement on short-term rentals and Form 1007
This article is part of Lendmire’s short-term rental 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
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.