The Quick Read: Once a short-term rental moves to 12-month leases, the appraiser measures its monthly market rent from comparable leased properties, and the lender generally uses the lower of that figure or your signed lease, so past booking revenue stops being the income basis. Your job is to make the property look, rent, and document like a long-term rental before the appraisal is ordered. The conversion helps in one way, because the standard rent report is built for exactly this case.
- The appraisal produces two numbers: a value (which drives LTV) and a market rent (which drives coverage).
- Nightly rates cannot be multiplied into monthly rent, so your Airbnb gross does not carry over.
- Most files in our network compare the signed lease to the appraiser’s rent and use the lower number.
- The form depends on unit count: Form 1007 for single-family and condo, Form 1025 for two to four units.
- Run a break-even rent check before ordering, because the appraised rent can land below what the property earned as a short-term rental.
Key Terms Defined
DSCR (debt service coverage ratio): monthly rent divided by the monthly housing obligation, so a result of 1.00 means rent equals the payment.
PITIA: principal, interest, taxes, insurance, and any association dues, which together make up the monthly obligation in the ratio.
Market rent: what comparable properties lease for on a monthly basis, as opined by the appraiser.
Rent schedule: the appraisal exhibit that documents market rent, using comparable leased properties.
Form 1007 and Form 1025: the two appraisal report forms that carry the rent analysis, split by unit count.
In-place lease: a signed lease with a tenant, usually a 12-month term.
FF&E: furniture, fixtures, and equipment, which a furnished short-term rental carries and a typical long-term lease does not.
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.
What Does the Appraisal Have to Show?
The appraisal must show two things on a converting STR: the value of the real property and the monthly market rent a long-term tenant would pay. The value sets your loan-to-value ratio. The rent sets your coverage ratio. Both can fall short on the same report, so you need to clear both tests.
DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage.
The coverage ratio is simple. Divide the rent figure by the full monthly obligation. A result near 1.00 means rent roughly equals the payment. Strong ratios open better pricing and leverage across the lenders in our wholesale network.
One caution keeps investors honest. Clearing 1.00 does not mean positive cash flow. The ratio compares rent to PITIA only, so repairs, vacancy, management, utilities, and capital expenses all sit outside it.
Which Appraisal Form Applies?
The unit count decides the form. A single-family home or condo gets a Form 1007, the Single-Family Comparable Rent Schedule, which Fannie Mae’s appraiser guidance describes as documenting estimated monthly market rent for a single-family investment property and also usable for condominium investment properties. A two- to four-unit property gets Form 1025, which the Selling Guide’s appraisal forms page lists as the report for that unit count. These are agency form names only. DSCR loans are not agency products, and our program terms come from the lenders in our network.
| Property type | Form | What it measures |
|---|---|---|
| Single-family | 1007 | Monthly market rent from leased comps |
| Condo | 1007 | Same, with HOA dues counted in PITIA |
| Two to four units | 1025 | Rent built up unit by unit |
On a Form 1025, each unit gets its own rent figure, so one vacant or oddly configured unit can pull the total down.
Why Doesn’t Nightly Income Carry Over?
Nightly income does not carry over because the rent schedule compares monthly leases, not nightly stays. A short-term rental differs from a lease in three ways: it is priced nightly, it includes furniture and equipment, and it runs on terms and conditions rather than a lease. The same Fannie Mae update says the appraiser must value only the real property and exclude FF&E and the business.
McKissock, an appraiser education provider, adds that appraisers cannot multiply a nightly rate by 30 to get monthly rent. It also says they cannot multiply by 30 and then deduct business expenses. The same piece notes that STR use does not change a property’s value.
You may see an argument that the 1007 cannot support short-term rental income at all. Class Valuation, an appraisal management company, says STR income belongs in a narrative addendum. That is true for a property still operating nightly. A converting property is a different file, because the rent form is the right tool once the property leases monthly.
How Does the Income Evidence Change?
Before conversion, a short-term rental file leans on booking history or a projection. After conversion, it leans on the lease and the appraiser’s market rent. Your booking history stops being the qualifying basis, and lease-comp risk replaces seasonality and platform-demand risk.
| Factor | Before conversion | After conversion |
|---|---|---|
| Income basis | Hosting history or projection | Lease or appraiser rent |
| Key document | Platform statements | Signed lease |
| Main risk | Seasonality, platform demand | Lease comps, tenant quality |
| Appraisal rent tool | Narrative addendum | Form 1007 or 1025 |
Our network’s short-term-rental programs expect about 12 months of hosting history, along with a 640+ credit score. If you are converting, you are leaving that product. You are also trading hosting-history requirements for lease documentation. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review. For the income-evidence side, see Lendmire’s piece STR1007 vs Booking History for an Investor Converting to Long-Term Rental.
What Is the Conversion Sequence, Step by Step?
Follow this order so the appraiser sees a long-term rental, not a furnished listing with a lease attached.
1. Run the break-even check first. Estimate what comparable monthly leases bring in, then compare that to the full PITIA. If the gap is thin, restructure before you spend money on an appraisal.
2. Sign the lease. Use a standard monthly lease with a real tenant, and keep the signed copy and the deposit record.
3. Deactivate the listings. Take down booking-platform pages and close the calendar, because a live listing makes the property look like an STR.
4. Remove the furniture package. A furnished unit invites comparison to furnished rentals, and FF&E is excluded from value anyway.
5. Tell the appraiser the property is a long-term rental. Provide the lease so the rent opinion starts from leased comps.
6. Reconcile lease and appraised rent. The lender generally uses the lower figure, so compare the two before the ratio is run.
7. Review the final ratio and leverage together. Confirm that both the value and the rent clear the program you are targeting.
What Does the Math Look Like?
Picture a converting property with modeled coverage figures, shown here as ratios because rent dollars would only invite a wrong assumption. These are illustrative, not market data.
- Short-term income basis: coverage near 1.35x.
- Signed lease: coverage near 1.05x.
- Appraiser’s market rent: coverage near 0.98x.
The lender uses the lower number, so the file runs at 0.98x. That is just under 1.00, and 1.00 is where many select programs start. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted, and qualification stays subject to lender guidelines, credit approval, and property review.
A larger down payment 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.
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 Documents Should You Gather?
Bring a short stack to the file:
- The signed lease and proof of the deposit.
- Evidence the booking listings are deactivated, plus any cancelled-booking records.
- Entity papers, if the property sits in an LLC, subject to lender program eligibility.
- Condo or HOA documents, including dues and rental rules.
- A note on local rental rules.
What If the Appraised Rent Comes In Low?
Do not respond by ordering a second appraisal elsewhere and hoping for a higher number. A different lender ordering a new appraisal is a gamble, and the new rent may be lower, not higher. Work through these options instead.
| Option | What it does | Tradeoff |
|---|---|---|
| Pay down the loan | Lifts coverage | More cash in |
| Sub-1.00 path | Select lenders review it | Leverage and terms adjust |
| Interest-only structure | Lowers monthly obligation | Available through select lenders |
| Hold and re-lease | Builds lease evidence | Delays the deal |
Ask the appraiser to review comps that you can support with documentation, such as comparable monthly leases in the same area. Do not argue for nightly revenue.
Where Does the General Rule Break?
The general rule is that leased rent drives coverage, and a few cases bend it.
- Vacant property, no lease. The appraiser’s rent opinion is the only number. We see this routinely, though the lender decides how to treat it.
- Still furnished or listed. The appraiser may weigh the property as an STR, and the file may be reviewed under short-term-rental guidelines instead.
- Condos. HOA dues count in PITIA, and the project’s own rental rules can limit your options.
- Two to four units. Each unit gets its own rent line, so a weak unit drags the total.
- Mid-term stays. Furnished stays of a few months sit between the two models, and the file reads cleaner as a long-term lease or as a short-term rental, not a hybrid.
- Ineligible property types. Manufactured homes, log homes, and barndominiums are not offered in our DSCR programs.
- Investors who need STR income to qualify. If the property only works at nightly revenue, converting may be the wrong move.
What Program Numbers Should You Plan Around?
Across our wholesale network, these ranges are typical and subject to lender guidelines. On a purchase of a standard long-term rental, most files land at 75%-80% LTV, and select high-leverage programs reach 85% LTV with roughly a 700+ credit score. On a cash-out refinance of a standard rental, most programs top out around 75% LTV, with about 6 months of seasoning as the common expectation.
Short-term-rental collateral is a separate set of numbers. Purchase leverage runs up to 75% on that collateral, and refinance and cash-out run around 70%.
Credit floors vary. A 620 floor exists in parts of the network, most programs want around 660, and 700+ unlocks the strongest leverage tiers. Loan sizes run up to $3,000,000 on standard programs (smaller balances available through select lenders), and above $2,500,000 the network generally holds to 30-year fixed structures. Reserves commonly sit near 6 months of PITIA, and conservative rate-term files at modest leverage under $1,500,000 can see reserves waived. Larger loans typically step up to about 9 months. Extended terms, interest-only periods, and ARM structures are available through select lenders.
For more on how these pieces fit together, see Lendmire’s complete DSCR loans guide.
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.
Frequently Asked Questions
Can I use my Airbnb history to qualify after I convert?
No, not as the income basis. Once the property is on monthly leases, the file runs on the lease or the appraiser’s market rent. The 1007 documents monthly rent from leased comps and carries no booking history.
Which number does the lender use if my lease and the appraiser disagree?
On most files, the lower of the two. A lease signed above market rent will not lift the ratio, and a lease below market rent can pull it down. Reconcile them before you submit.
Do my furnishings add to the rent or the value?
No. The appraisal values the real property only, and FF&E and the business are excluded. Removing the furniture package before the appraisal avoids a furnished-rental comparison.
What if I have no tenant yet?
The appraiser’s rent opinion is then the only number. That works on many files, but it leaves you with no lease to cross-check, so run the break-even check first.
Does the 1007 apply if I own a duplex?
No. Two to four units use Form 1025, which builds rent unit by unit. Your coverage depends on each unit leasing near its market rent.
Ready to Run Your Numbers?
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. As a broker, it arranges financing through select lenders in its wholesale network across 41 markets, including Washington, D.C. The calculator on this page gives an illustrative estimate only, and every file is reviewed individually, subject to lender guidelines. Not a commitment to lend.
A property that converts cleanly is one where the lease, the listings, and the appraisal all tell the same long-term-rental story.
About Lendmire
Lendmire is a non-QM mortgage brokerage (NMLS# 2371349) arranging DSCR investor loans in 41 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR loans are evaluated by the lender on rental income rather than personal income, subject to lender guidelines — a fit for LLC-owned portfolios, self-employed investors, and operators scaling beyond conventional loan caps. Recognized as a Scotsman Guide Top Mortgage Workplace in 2025 and 2026.
Investors focused on short-term rentals can review DSCR loans for Airbnb and short-term rentals.
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References
1. Fannie Mae Appraiser Update
2. Fannie Mae Selling Guide B4-1.2-01
3. McKissock Learning, Form 1007 and Short-Term Rental Appraisals
4. Class Valuation, Why Form 1007 Can’t Be Used for Short-Term Rentals
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 a Luxury Rental DSCR Loan Works · Can an Acreage Luxury Rental Close With a Sub-1.0 DSCR? · DSCR vs Asset Depletion for a Retiree Buying a Luxury Rental
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.