The Quick Read: Short-term-rental income and long-term lease or 1007 market rent are two different ways to set the rent number on the same DSCR purchase. STR income suits a property with a real hosting record or a defensible projection. Lease or market rent suits a property that works just as well with a monthly tenant. Which one wins depends on the property, the history, and what the program will count.
- The coverage formula is the same on both paths. Only the rent figure changes.
- STR purchases through the network top out at 75% LTV, with a 640 credit score and about 12 months of host experience expected.
- Lease or market rent is the more conservative path. It often produces a lower number on a true vacation property.
- A strong ratio does not mean positive cash flow. Vacancy, repairs, management, and utilities sit outside the calculation.
- Run both numbers before you make an offer.
The honest answer on who each option is for: STR income is for investors buying a property that earns more as a nightly rental than as a monthly one, and who can document it. Lease or 1007 rent is for investors whose property clears coverage on a monthly tenant, or whose STR numbers are too thin to carry the file.
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 Oct 15, 2026
Prefilled with starting assumptions — 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 Oct 15, 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.
Side-by-Side
The table below uses published industry norms for how each income basis is documented. Program specifics on the Lendmire side come from the wholesale network’s guidelines and vary by lender and file.
| Factor | STR income basis | Lease or 1007 basis |
|---|---|---|
| Review basis | Projected or documented nightly-rental income | Signed lease or appraiser’s market rent |
| Typical documentation | Platform statements, third-party projection, or appraiser STR analysis | Lease and the appraisal’s rent schedule |
| Who produces the number | Host history, data vendor, or appraiser | Appraiser, using monthly-lease comps |
| Property types | One-unit and small multifamily, subject to program review | One-unit (1007) and 2-4 units (1025 rent analysis) |
| Entity vesting | Individual or LLC, subject to program terms | Individual or LLC, subject to program terms |
| Reserves | Vary by lender, leverage, and loan size | Vary by lender, leverage, and loan size |
| Legal exposure | Local STR rules, HOA, and licensing matter | Fewer local-rule questions |
| Income volatility | Seasonal swings | Steadier |
What Is the 1007, and What Isn’t It?
The 1007 is the Single-Family Comparable Rent Schedule. It asks the appraiser for an “Indicated Monthly Market Rent” built from three rental comparables. The comps are monthly leases. That is the whole design.
That design is why people argue about “STR1007.” The phrase gets used three different ways:
1. The 1007 form itself, with monthly-lease comps. 2. An STR analysis the appraiser attaches to the appraisal as an addendum. 3. A fallback floor, where the program uses 1007 rent if the STR number fails.
Mixing those up causes most of the confusion. The form measures long-term rent. It does not estimate a nightly rate. Multiplying a nightly rate by 30 and dropping it on the form is not how it is meant to be used. For 2-4 unit properties, the rent analysis sits in a different appraisal form, and a narrative addendum or nightly comps are often added for STR use.
One timing note. The appraisal industry is moving to a new form standard, and the mandate for new agency-delivered appraisals starts November 2, 2026. DSCR loans are not agency products, so this is contrast only. Still, expect narrative addenda to stay important for STR income.
How Lease or 1007 Income Works on a Purchase
On a long-term basis, the rent used is often the lower of the signed lease and the appraiser’s market rent. Programs vary on that. On a vacant purchase there is no lease, so market rent from the appraisal drives the number.
Here is the friction point. A seller hands over a lease that sits above market. The appraiser’s rent schedule comes back lower. The file usually runs on the lower figure. Files that were priced on the seller’s lease get re-run, and some fall short.
Say you plan to hold the property as a straight monthly rental. The 1007 path is simple. One appraisal, one rent opinion, one ratio. Rent divided by PITIA (principal, interest, taxes, insurance, and association dues). Across the wholesale network, 1.00 is where select programs start, and stronger ratios tend to open better leverage and terms. A separate select-lender path takes coverage below 1.00 with leverage and terms adjusted.
How STR Income Gets Documented
Short-term-rental purchases usually follow one of three routes:
- Twelve months of platform statements from the host.
- A third-party projection for a property with no history.
- An appraiser’s STR analysis.
The network’s STR programs typically expect about 12 months of host experience from the borrower, a credit score of 640 or better, and coverage of at least 1.00 on a purchase. Leverage on an STR purchase tops out at 75% on the strongest files. STR refinances come in lower, at up to 70% LTV, with a 1.00 coverage floor. Cash-out on STR collateral also tops out at 70%. Keep those figures separate. Do not blend them.
Projection tools are only as good as their comps. The AirDNA Rentalizer searches for comparable properties within a 10-mile radius and weights their historical performance. In a thin market, 10 miles may pull in properties that don’t look much like yours. Treat the output as an estimate, and expect a lender to adjust it before it reaches the ratio.
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. A strong projection on a property that cannot legally operate as an STR is worth nothing.
When STR Income Is the Better Fit
STR income is the better fit when the property earns clearly more per month as a nightly rental than the monthly rent comps suggest, and you can show it. Think of a lake or ski property where monthly comps are sparse and low, but the booking pattern is established.
It fits best when:
- The property has a hosting record, or you have documented host experience.
- Monthly-lease comps understate the income because the area is a visitor market.
- The 1007 number alone would fall short of coverage.
- The property is legally allowed to operate as an STR, including HOA and condo rules.
The 1007 alone can understate a true vacation property. One trade-press analysis notes this can produce artificially low ratios that don’t reflect operating performance. That is the case for pursuing the STR basis.
Understand the trade. STR income is lumpier. A strong summer can mask a weak winter. Lenders know this and adjust the projection before using it. Reserves also matter more on a seasonal property, and they commonly run around 6 months of PITIA across the network, varying by lender, leverage, and loan size.
When Lease or 1007 Income Is the Better Fit
Lease or 1007 income is the better fit when the property would rent fine to a monthly tenant and the STR story is thin or unproven. It also fits when local rules are unclear, when you are a first-time host with no record, or when the property sits in a market where nightly demand is soft.
It is the cleaner file when:
- The monthly rent comps already clear 1.00 coverage on their own.
- You lack the host experience an STR program expects.
- The STR projection rests on weak comps or a thin market.
- HOA or licensing questions are unresolved.
There is a real hedge here. A file that clears on long-term rent has a floor under it. If STR bookings disappoint, the property still carries itself on paper. That does not make it cash-flow positive. Coverage compares rent to PITIA only. Repairs, vacancy, management, utilities, and capex sit outside it.
The honest toss-up is the property that clears on both. In that case the lease path is usually the smoother file, and you can still operate it as an STR later if the rules allow. Check the loan terms and program rules before changing use after closing.
Worked Example: One Property, Two Paths
Run the numbers on a one-unit property in a visitor market. These are modeled assumptions, not market facts.
| Scenario | Rent basis | Coverage read |
|---|---|---|
| Path A | Appraiser’s 1007 market rent | Below 1.00 |
| Path B | STR projection, adjusted by the lender | Around 1.15x |
| Path C | STR projection with a heavier adjustment | Borderline, near 1.00 |
On Path A, the monthly-lease comps come in low and coverage lands under 1.00. Sub-1.00 coverage is available through select lenders in the network, with leverage and terms adjusted. On Path B, the STR figure lifts coverage into the 1.1s. On Path C, a lender that discounts the projection more heavily brings it back near the floor.
The lesson is not that STR always wins. The lesson is that the same property can read three ways, and the spread between them is the risk. If Path C still clears 1.00, the file has cushion. If it only clears on Path B, the file leans on an optimistic projection.
Run the reverse, too. A modest property in a stable rental neighborhood can clear 1.00 on lease rent with no STR assumption at all. There, the STR income is upside, not the foundation. The strongest files clear both tests: enough equity and enough rental coverage.
A Simple Decision Test
Use this order before you make an offer:
1. Confirm the property can legally operate as an STR under local rules, HOA, and condo documents. 2. Run coverage on the 1007 or lease rent alone. 3. Run coverage on the STR projection, then again with a heavier adjustment. 4. Check your own host history against the roughly 12 months an STR program expects. 5. Ask the loan officer which income type the quote assumed, and what happens if the appraisal rent comes back low.
If step 2 clears, you have a conservative file. If only step 3 clears, you have an STR-dependent file, and you need the documentation to match.
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.
What Derails These Files
The failures are mostly paperwork gaps, not exotic problems.
- Wrong income assumption in the quote. The investor priced the deal on a gross projection, then the appraisal rent came back lower.
- Nightly rate times 30. Fine for back-of-napkin math. Not a substitute for monthly-lease comps on a rent schedule.
- No host history on a refinance. A purchase may run on a projection. Refinance files usually want actual platform statements.
- HOA or condo rules that bar short stays. The questionnaire catches it late.
- Thin comps. A projection built on dissimilar properties 10 miles away does not hold up in review.
- Entity paperwork. Vesting in an LLC is common, subject to program terms, but operating agreements and guaranty documents need to be clean and consistent with the purchase contract.
A larger down payment lowers the payment and can lift the ratio. It does not erase leverage caps, credit floors, reserve rules, or property eligibility. Manufactured homes, log homes, and barndominiums are not offered through these programs, whatever the income basis.
If the STR Path Misses the Ratio
Three adjustments are common, each subject to lender guidelines and credit review:
- Lower the leverage, so the payment shrinks against the same rent.
- Switch to the lease or 1007 basis if it clears.
- Look at structures through select lenders in the network, such as interest-only periods or extended terms, which can reduce the monthly obligation.
None of these is a promise. Each gets reviewed on the property and the borrower. For the longer view on how history and leases compare on luxury and high-end rentals, see Lendmire’s piece Platform History vs Long-Term Lease as DSCR Income for Luxury Rentals. The full mechanics of how coverage, leverage, and credit fit together sit in the complete DSCR loans guide.
Balanced Verdict
Neither basis is better in the abstract. STR income is the right basis when the property truly earns more nightly and you can document it. Lease or 1007 rent is the right basis when the property stands on monthly rent or the STR evidence is weak. The best files clear on the conservative number and treat STR income as upside.
If you are buying 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. Investors can start with an illustrative estimate in the calculator, then request a quote.
Key Terms Defined
DSCR: The ratio of rent used for lender review to the monthly PITIA obligation.
PITIA: Principal, interest, taxes, insurance, and association dues.
Form 1007: The appraisal rent schedule that gives an indicated monthly market rent from monthly-lease comps.
STR analysis: An appraiser’s narrative or addendum estimating nightly-rental income.
Platform history: Booking statements from a host’s Airbnb or Vrbo account.
Projection: A data-vendor estimate of income for a property with no history.
Frequently Asked Questions
Can the 1007 be used to value airbnb income?
Not by itself. The form is built around monthly-lease comps, so it measures long-term rent. STR income is usually supported by platform history, a projection, or an appraiser’s addendum instead.
Which income path gives the higher coverage ratio?
On a true vacation property, STR income often produces the higher figure, because monthly comps tend to run lower. On a stable rental market, the two can land close together. Run both before offering.
What do STR programs in the network expect?
Typically a 640 credit score, about 12 months of host experience, and coverage of at least 1.00 on a purchase, with leverage up to 75% on the strongest files. Refinance and cash-out run lower, up to 70% on STR collateral. All of it is subject to lender guidelines.
Does an LLC change which income basis I can use?
Vesting in an LLC is generally available, subject to program terms, and the income basis does not usually change that. The entity documents still need to be complete.
Does clearing 1.00 mean the property cash flows?
No. The ratio compares rent to PITIA only. Vacancy, repairs, management, utilities, and capex are outside it.
Investors focused on short-term rentals can review DSCR loans for Airbnb and short-term rentals.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage focused on DSCR investor financing, helping arrange programs through wholesale and investor-lending channels in 41 markets, including Washington, D.C. DSCR loans are evaluated by the lender on property cash flow rather than personal income, subject to lender guidelines, supporting LLC closings and accommodating investors with four or more financed properties. Scotsman Guide Top Mortgage Workplace in both 2025 and 2026.
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References
1. Freddie Mac Form 1000 / Fannie Mae 1007
3. AirDNA Rentalizer help article
4. HousingWire: short-term rentals and the appraisal playbook
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 Qualify for a DSCR Loan in Massachusetts · Buying an Airbnb With Cash vs. a DSCR Loan · How a DSCR Lender Haircuts Gross Airbnb Revenue Before Qualifying
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.