The Quick Read: On a short-term rental, the appraiser’s rent schedule measures only what the property would earn on a monthly lease, so it acts as a conservative floor, while the lender builds the qualifying income from separate evidence such as an appraiser’s short-term analysis, host history, or a market projection, then divides it by the full monthly payment. The evidence you bring, more than the form itself, usually decides whether coverage clears.
Key Takeaways
- DSCR (debt service coverage ratio) compares the rent a lender counts to the property’s full monthly payment. A 1.00 reading means counted income equals that payment.
- The appraisal does two jobs: it sets value, which drives leverage, and it gives a monthly rent opinion.
- Nightly rate times 30 is not a rent figure, and neither the appraiser nor the lender can use it.
- Purchases lean on projections or an appraiser’s analysis. Refinances lean on actual booking records.
- Local rules, HOA limits, and thin comparable data can cap the income a lender will count.
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.
Key Terms Defined
PITIA: The full monthly payment: principal, interest, taxes, insurance, and any HOA dues. It is the bottom half of the DSCR math.
LTV (loan-to-value): The loan amount as a percentage of the appraised value or price. Value from the appraisal sets the ceiling.
Form 1007: The single-family comparable rent schedule. It gives an appraiser’s opinion of monthly market rent on a one-unit property.
Form 1025: The small residential income property appraisal report for two to four units. It includes an operating income statement.
Short-term rental analysis: A labeled narrative section from the appraiser that estimates nightly-stay income using named data and matched short-term comparables.
Market-data projection: A third-party estimate of what a property could earn as a short-term rental. It is mostly used on purchases, where no history exists.
Trailing history: Twelve months of actual platform or property-manager statements, or bank deposits, showing what the property earned.
Expense factor (haircut): A reduction the lender applies to gross short-term income before running the ratio, because nightly revenue carries costs a monthly lease does not.
How DSCR Appraisal and Rent Schedule Rules Work for a Short-Term Rental, Step by Step
The process runs in five steps. The appraisal comes first, but the qualifying income comes from somewhere else.
1. Order the appraisal. It does two jobs. It sets value, which drives leverage and cash to close. It also gives a rent opinion.
2. The appraiser completes the rent schedule. On a one-unit property that is Form 1007. The appraiser picks monthly-lease comparables, adjusts them for size, condition, bedroom count, and location, and states a monthly market rent.
3. The file gets short-term income evidence. That evidence sits outside the 1007. Programs in the network commonly accept an appraiser’s short-term analysis, trailing history, bank statement deposits, or, on purchases, a market-data projection.
4. The lender applies an expense factor. Gross short-term income is reduced before the calculation. The size of the reduction varies by program and evidence type.
5. The lender runs the ratio. Counted income goes on top. The full monthly payment goes on the bottom, with no reduction. Only the top number gets the haircut.
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. That is why the property’s income does so much of the work.
One more point matters for the ratio. DSCR compares rent to PITIA only. Clearing 1.00 does not mean the property produces positive cash flow, because repairs, vacancy, management, utilities, and capital spending sit outside the calculation. Short-term rentals carry more of those costs than most, which is exactly why lenders discount the income.
Why Can’t the Rent Schedule Support Nightly Income?
Because the form was built to describe leases, not stays. The 1007 asks for indicated monthly market rent. To answer, the appraiser must analyze competing properties that rent month to month.
Fannie Mae’s appraiser update on short-term rentals says the same thing about the form. It describes the 1007 as a monthly rent tool, notes it was not designed for single-family homes used as short-term rentals, and says it would be incorrect to take short-term comparables and multiply the nightly fee by 30. A Nevada Real Estate Division meeting packet reproduces that guidance.
DSCR loans are not agency loans, and agency rules do not govern them. The update matters here for one reason: it explains why the form cannot carry nightly income. Lenders in the network still use the 1007 and 1025 as the rent-schedule vehicle for long-term rent.
The nightly-times-30 shortcut fails for plain reasons. It ignores vacancy, furnishing costs, cleaning, supplies, and platform fees. McKissock Learning makes the same point, adding that an appraiser cannot multiply nightly income by 30 even after deducting business expenses.
McKissock also draws a line that investors often miss. The appraiser values the real property only. Personal property and business income sit outside the value conclusion. The lender decides what income counts, from all sources. So the appraiser does not decide your short-term income. The lender does.
Appraisers do not all agree on how to handle the form. Class Valuation argues the 1007 cannot support short-term income at all and recommends a labeled narrative income analysis instead. McKissock’s counterpoint is that not every loan goes through an agency, so non-agency lenders can ask for items the agencies would not. Both views describe the same reality: the form alone is the wrong tool for nightly income.
What Evidence Replaces It?
Four kinds of evidence show up on short-term rental files. Each has a best use and a weak spot.
| Evidence | Best use | Main weakness |
|---|---|---|
| Appraiser short-term analysis | Purchase with no history | Not standardized; quality varies |
| Market-data projection | Purchase, new build | Discounted; not actual earnings |
| Trailing history | Refinance, cash-out | Weak if the property is new to hosting |
| 1007 long-term rent | Conservative fallback | Often understates strong STR income |
The evidence type changes the coverage figure, not just whether the income is accepted. A projection usually gets a heavier discount than twelve months of actual statements. Bank deposits can serve as primary evidence in some programs and as a cross-check in others.
Many programs accept more than one path. Others take only one. Which paths a program accepts can decide approval, so that question belongs at the start of the file, not the end.
What Does a Credible Appraiser Short-Term Analysis Contain?
There is no standard short-term appraisal product. The narrative analysis is not uniform, and quality varies by appraiser. A good one reads like a short market study. Use this as a pre-order checklist:
- A named data source for the nightly rates and occupancy figures.
- Matched short-term comparables, similar in size, bedroom count, amenities, and location.
- Stated average nightly rate and occupancy, with the method shown.
- Seasonality, including slow months, not only peak weeks.
- A vacancy and turnover assumption.
- A clear label stating that this is an income analysis, separate from the 1007 rent opinion.
An analysis that gives one big annual number with no method behind it gives the underwriter little to work with. Underwriters discount what they cannot trace.
Which Number Does the Lender Use?
It depends on the transaction. On a leased long-term rental, underwriting typically uses the lower of the lease and the appraised market rent. Short-term files work differently because several numbers can exist at once: the 1007 rent, the appraiser’s short-term analysis, host history, and a projection. The program decides which ones it accepts and which one controls.
| Scenario | Usual evidence | Note |
|---|---|---|
| Purchase, no history | Projection or appraiser analysis | Purchase leverage up to 75% LTV |
| Refinance of a host | Trailing history | Lower leverage than a purchase |
| Cash-out of a host | Trailing history | Up to 70% LTV on STR collateral |
| Long-term to short-term switch | Projection or 1007 fallback | History does not exist yet |
| Two to four units | Form 1025, plus support | Per-unit data often needed |
Across the network, short-term programs generally look for a credit score around 640 or higher and about twelve months of landlord or host experience. Purchases on short-term rentals typically top out at 75% LTV, while refinance and cash-out on short-term-rental collateral sit around 70%. The coverage floor is 1.00 on purchases and refinances. Reserves vary by lender, leverage, and loan size, and are commonly around six months of PITIA. Everything remains subject to lender guidelines and individual underwriting.
Some select lenders in the network also review coverage below 1.00, with leverage and terms adjusted. That is a separate path from the standard floor, not a lower floor on the same program.
The 1007 fallback cuts both ways. Where short-term revenue far exceeds long-term rent, a program that uses only the rent schedule can fail coverage on a property that earns well. In a weak short-term market, the same fallback can rescue a file that booking data would sink.
Two to four units. Form 1025 replaces the 1007 and includes an operating income statement. It is still built on monthly leases, so appraisers often add nightly comparable data or a narrative addendum. Some files also count part of the income from long-term leases. Per-unit support is common.
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.
A Worked Example in Ratios
These figures are modeled assumptions, not market data. Take one house and run it two ways.
On the appraiser’s long-term rent from the 1007, the house covers its full monthly payment at roughly 0.90x. On host history, after the expense factor, the same house covers at roughly 1.15x. Same property, same payment, same value. Only the income evidence changed.
Notice what stayed fixed. The denominator, the full PITIA, did not move. The haircut touched only the income side.
Now stress it. The house has about a 13% cushion between 1.15x and 1.00x. If counted income slips about 7%, coverage falls to roughly 1.07x. A heavier expense factor, a softer season in the data, or a higher insurance premium can each take a bite of that cushion. Run the break-even before you make an offer, not after the appraisal arrives.
The first-hand pattern across files: the surprise is rarely the nightly rate. It is usually the evidence path. A property with strong booking history on a program that accepts only the rent schedule can look under-covered, and a purchase with no history can look thin on a projection that gets discounted. Matching the property to the right program early prevents most of those surprises.
How to Order and Brief the Appraisal
Treat ordering as a conversation, not a checkbox. Before the appraisal is ordered, confirm with the lender what the program will accept as short-term income evidence. Ask the question plainly: what happens if the 1007 comes in low?
Then brief the appraiser. Tell them the intended use is short-term rental. Share the property’s amenities, bedroom count, and any permit or licensing documents. Provide trailing statements on a refinance. If you want the short-term analysis included, ask for it up front. Lendmire’s piece How to Order a Short-Term Rental Rent Analysis on a DSCR Purchase Appraisal covers that request in more detail.
Pre-order checklist:
- Which income evidence does the program accept, and which one controls?
- What expense factor applies to each type?
- Does the program require a rent schedule even when other evidence exists?
- On a two-to-four-unit property, is per-unit support needed?
- What happens to leverage if the appraised value comes in under the price?
What If the Rent Opinion Comes In Low?
First, diagnose which number came in low: value or rent. They fail differently. A low value cuts leverage and raises cash to close. A low rent opinion hits coverage.
If value is low, ask about a reconsideration request supported by better comparables. If the rent opinion is the problem and the file has other evidence, check whether the program lets you switch evidence type, such as moving from the rent schedule to host history or a projection. If the ratio still falls short, options include more cash down to lower the payment, a different term structure, or a select-lender path that reviews coverage below 1.00 with leverage and terms adjusted. Extended terms and interest-only periods are available through select lenders in the network.
A larger down payment can lift the ratio. It does not erase leverage caps, credit floors, reserve rules, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.
For a soft-market angle, see Lendmire’s piece How Short-Term Rental DSCR Appraisal Rules Work in a Soft Market Short Sale.
When Can Short-Term Income Not Count?
Sometimes the income cannot be counted at all. Permits, HOA restrictions, and missing income evidence can sink a file regardless of what the nightly rates look like.
Thin comparables are the other common problem. Rural, resort, and unusual properties may have too few short-term comps for the appraiser to support a figure. In that case the file often falls back to the 1007 rent or to a more heavily discounted number. Properties in the network’s not-offered categories, such as manufactured homes, log homes, and barndominiums, are not eligible for DSCR financing regardless of income.
The lender, not the appraiser, makes the final call on income. 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 broader picture, the complete DSCR loans guide walks through how these programs fit together.
Frequently Asked Questions
Can Form 1007 support Airbnb income?
No. It documents monthly market rent only, based on monthly-lease comparables. Nightly income needs separate evidence, such as an appraiser’s short-term analysis, trailing history, or a projection.
Do I need a separate short-term analysis from the appraiser?
It depends on the program. Some accept it as primary evidence, some accept host history or a projection instead, and some rely on the rent schedule alone. Ask the lender which path applies before the appraisal is ordered.
Does a two-to-four-unit short-term rental use Form 1025 alone?
Usually not alone. The 1025 is built on monthly leases, so appraisers often add nightly comparable data or a narrative addendum. Some files count part of the income from long-term leases.
Can I use projections on a refinance?
Typically refinances and cash-outs rely on actual booking records, since history exists. Projections are mainly a purchase tool. A converted property with no hosting history may be an exception, subject to program rules.
Which number wins when several exist?
The program decides. On long-term leases, underwriting typically uses the lower of the lease and the appraised rent. On short-term files, the controlling figure depends on which evidence the program accepts and the expense factor it applies.
Next Step
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. Lendmire is a broker that arranges financing through select lenders in its wholesale network across 41 markets, including Washington, D.C. Qualification is subject to lender guidelines and is not a commitment to lend.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage built around DSCR investor lending, with programs available in 41 markets, including Washington, D.C. DSCR lenders commonly evaluate rental-income coverage instead of personal income paperwork — a practical fit for LLC-owned and multi-property investors. Terms vary by lender, property, leverage, and program. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae Appraiser Update on short-term rentals
2. Nevada Real Estate Division reproduction of the Fannie Mae update
3. McKissock Learning, Form 1007 and Short-Term Rental Appraisals
4. Class Valuation, Appraisal Form 1007 and 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 Super Jumbo DSCR Appraisal Escalation Rules Work for a Tower Condo · How Super Jumbo DSCR Low Appraisal Options Work for Luxury STR Operators · How a Luxury Rental DSCR Loan Works in Whitefish
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.