The Quick Read: A strong rental appraisal comes from preparing for two opinions the same report delivers: the property’s value and its market rent. Give the appraiser clean access, current leases, proof that rent is collected, and recent leased comparables. Then size your cash-out request with a cushion in case value or rent lands lower.
- The lender orders the appraisal, and you do not choose the appraiser. Your job is to hand over evidence, not to steer the number.
- Rent evidence matters most when the loan is reviewed for the property rather than you. That is the DSCR path, where the appraiser’s rent opinion can become the income number.
- Agency rules and DSCR rules differ. Fannie Mae’s path leans on your personal income, while select DSCR lenders in a wholesale network lean on the property’s income.
- A low value shrinks the loan through the leverage cap. A low rent opinion shrinks it through the coverage test. Plan for both.
Key Terms Defined
Cash-out refinance: A new loan that pays off the old one and hands you the extra equity as cash.
Market rent: What the appraiser concludes a similar unit would lease for today, based on comparable rentals.
Contract rent: The rent in your actual lease, which can sit above or below market rent.
Form 1007: The single-family comparable rent schedule. The appraiser attaches it to the main report to give a market-rent opinion on a one-unit rental.
Form 1025: The small residential income property appraisal report, used for two-to-four-unit buildings.
DSCR (debt service coverage ratio): Monthly rent divided by the full monthly housing obligation. That obligation is principal, interest, taxes, insurance, and any HOA dues.
PITIA: The abbreviation for that full obligation: principal, interest, taxes, insurance, and association dues.
LTV (loan-to-value): The loan amount divided by the appraised value.
Seasoning: The waiting period a lender wants between buying a property and borrowing against it.
DSCR Cash-Out Calculator
Run the cash-out numbers in your market
Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Oct 29, 2026
Prefilled with starting assumptions — enter your property’s value, balance, taxes, and insurance for a more accurate picture.
Program parameters update from Lendmire’s centralized guideline source. Taxes and insurance are editable estimates.
As of Oct 29, 2026 · General Freddie Mac market benchmark, not a Lendmire loan offer. Property value, balance, taxes, and insurance are editable estimates. Maximum loan-to-value varies by lender, program, property type, and seasoning. 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 Appraiser Actually Hand Back on a Rental?
The appraiser delivers a value opinion and a rent opinion in one package. Value feeds the leverage test, and market rent feeds the income test. They are separate numbers, so a strong one can sit beside a weak one.
For a one-unit rental, the rent opinion arrives on Form 1007. The Form 1000/1007 instructions say the lender uses it to get market rent for a single-family investment property from the appraiser. The appraiser compares your unit against leased comparables and adjusts only for significant differences. The form ends in a single reconciled monthly market-rent figure.
| Property type | Appraisal form | Where rent shows up |
|---|---|---|
| One-unit rental | Main report plus Form 1007 | Rent schedule attachment |
| Two-to-four units | Form 1025 | Unit-by-unit rents in the report |
| Condo rental | Condo report plus rent schedule | Rent schedule attachment |
| Five or more units | Income-based valuation | Varies by lender |
Fannie Mae’s Selling Guide section on appraisal forms requires the 1007 only when the property is a one-unit investment property and the borrower uses rental income to qualify. Otherwise the agency does not require it. That detail matters, because many investors assume the rent schedule is mandatory on every rental refinance.
The forms are also changing. A Fannie Mae Appraiser Update set a November mandate date for the redesigned appraisal standard, and that date has now arrived. NAMB reports that a single dynamic form replaces the 1004, 1073, 1025, and other legacy forms. It also reports that lenders can request a temporary exception to keep submitting the older report format for a limited period.
Expect mixed form names for a while. A DSCR lender may keep asking for a rent schedule under its own guidelines, so the exact paperwork varies by lender and by appraisal vendor.
How Does Underwriting Use That Rent, Step by Step?
Underwriting treats the report in a fixed order: the lender orders it, the appraiser inspects and adjusts, and then the file decides which rent counts. Where it ends up depends on whether the loan is reviewed for you or the property.
1. The lender orders the appraisal. On a rental, the order includes the rent opinion. You supply access and documents, but the appraiser works for the lender’s process.
2. The appraiser inspects and pulls rental comps. Each comp lists its address, lease date, monthly rent, concessions, and condition. The appraiser also counts rooms and notes location and appeal.
3. The appraiser adjusts and reconciles. Concessions are adjusted to the market rather than to your unit. The result is one monthly market-rent opinion, with notes on vacancy and the rent trend.
4. The file splits the report into two tests. Value goes into the leverage test. Rent goes into the income test, but only when the loan needs it.
5. Underwriting picks the rent that counts. This is the step where agency and DSCR files part ways.
On the agency path, your personal income carries the file. Rent counts only if you choose to use it. The appraiser’s rent schedule supports that income, and the lender can report gross rent from it at delivery.
On a DSCR file, the rent is the income. DSCR qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Across the wholesale network, programs differ on which figure they accept. Some use the lease, some use the appraiser’s market rent, and many use the lower of the two. That is why the appraisal’s rent opinion deserves as much attention as its value.
DSCR also measures something narrower than cash flow. It compares rent to PITIA only. Repairs, vacancy, management, utilities, and capital expenses sit outside the ratio, so clearing 1.00 does not mean the property puts cash in your pocket.
For the broader mechanics, Lendmire’s complete DSCR loans guide walks through how the ratio and the program tiers fit together.
The Pre-Appraisal Checklist (the Part You Control)
Preparation on a rental is mostly paperwork and access. Owner-occupant advice about decluttering and staging does not fit a tenant-occupied unit. What helps here is evidence the appraiser can verify.
Documents to gather
- Current leases for every unit. They show contract rent, lease dates, and who pays utilities.
- Proof that rent is collected. A lease shows what tenants owe, while a ledger or deposit history shows what they actually pay.
- A list of recent leased comparables. Include addresses, lease dates, monthly rents, concessions, and what the tenants pay for utilities. The appraiser picks the final comps, but a well-organized list gives them a head start.
- Records of improvements. Rehab invoices, permits, photos, and a scope list show what changed and when.
- A feature sheet. List bedrooms, bathrooms, parking, outbuildings, and any rentable extras.
Property and tenant prep
- Occupied units: Give tenants written notice as your lease requires. Ask them to keep the unit accessible, and confirm utilities are on.
- Vacant units: Clean the unit and turn the utilities on. If the unit is vacant, a signed monthly lease before the appraisal gives the appraiser real evidence. The appraiser may otherwise rely on market rent alone.
- Deferred maintenance: Fix safety and habitability items first. Peeling paint, a dead appliance, or a leaking roof can pull the value down and invite repair conditions.
- Multi-unit buildings: Prepare each unit separately, because rent is reported unit by unit.
Appraiser day
Share your documents, point out dated improvements, and answer questions plainly. Do not argue about the number during the visit, and do not coach tenants on what to say. If the lease and the market differ, let the paperwork explain why.
Lease terms matter too. The rent schedule calls for monthly market rent supported by comparables leased on a monthly basis. A unit rented on month-to-month or twelve-month terms gives the appraiser better support than one rented any other way.
Where the General Rule Breaks
The standard routine holds for typical rentals, and a handful of property situations bend it.
Short-term rentals. The rent schedule asks for monthly market rent, so it cannot express a nightly rate. A DSCR lender that finances short-term rentals uses its own method for income, which makes this a program question rather than an appraisal-prep question. Across the network, short-term-rental cash-out refinances typically top out at 70% LTV on short-term-rental collateral. They also generally want a 640+ credit score, about 12 months of hosting history, and a 1.00 coverage floor on refinances.
Two-to-four-unit buildings. Rents live inside the income report, and that report is the one the redesigned form replaces on agency loans. Prepare a rent roll for each unit.
Lease below market. If the lender uses the lower figure, a discounted lease drags coverage down. A friend-or-family lease can cost you at refinance time.
Lease above market. An above-market lease rarely lifts coverage under a lower-of convention. The appraiser’s number caps what counts.
Vacant property. Market rent from the appraiser is typically what the lender uses.
Larger buildings. Five-plus-unit properties are valued mainly on their income.
Ineligible properties. Manufactured homes (single- and double-wide), log homes, and barndominiums are not offered through the network’s DSCR programs, so no appraisal prep changes that.
Seasoning. The agency path and DSCR programs count title seasoning differently. On most DSCR cash-out files in the network, about six months of ownership, measured from title recording, is the common expectation. Eligibility depends on the lender, borrower, and property.
How Should You Size the Cash-Out With a Cushion?
Size the request for a lower appraisal than you expect, because the value and the rent each cap the loan independently. On a standard rental, cash-out typically tops out around 75% LTV across most of the network. The table below shows how a miss moves the numbers. These are modeled assumptions, not market data.
| If the appraisal lands | Effect on loan ceiling | Effect on coverage |
|---|---|---|
| Value as expected | Full 75% LTV ceiling | Unchanged |
| Value 10% lower | Ceiling falls by the same 10% | Unchanged |
| Rent opinion 10% lower | Ceiling unchanged | Ratio falls about 10% |
| Both 10% lower | Ceiling and ratio both shrink | Combined squeeze |
Say your lease supports coverage near 1.20x. If the appraiser’s market rent comes in 10% lower and the lender uses the lower figure, coverage drops to roughly 1.08x. That is still above 1.00, but it may move you into a weaker pricing tier. A drop below 1.00 changes the conversation entirely.
A 1.00 coverage ratio is where select programs start, and stronger ratios generally open better pricing and leverage. A separate path through select lenders in the network takes coverage below 1.00, with leverage and terms adjusted. Both depend on lender guidelines and credit approval.
Credit and reserves sit alongside both tests. A 620 score is the floor in parts of the network, most programs want around 660, and 700+ unlocks the strongest leverage tiers. Reserves commonly run around 6 months of PITIA, stepping up to about 9 months on loans above $1,500,000. Reserve rules vary by lender, leverage, loan size, and transaction type. Standard programs reach up to $3,000,000.
A pattern shows up often on files like these. The property value lands where the investor expects, but the rent opinion lands below the lease because the lease was signed with a friendly tenant or before the neighborhood caught up. Investors who ran the coverage math at both the lease and the lower market-rent figure before ordering rarely face a surprise.
What If the Appraisal Comes In Low?
A low appraisal calls for a sequence of responses, and the first step is to read the report. Check the comps the appraiser used, the lease dates, and the adjustments. Then work down the ladder.
1. Check for factual errors. Wrong square footage, a missed bedroom, or a comp from a different submarket are fair grounds for a correction request.
2. Ask the lender about a review. Useful evidence includes recent leased comps the appraiser did not consider.
3. Resize the loan. A smaller cash-out request may still make sense if the numbers support it.
4. Fix the weakness and wait. If rent is the problem, leasing the unit at market rent and documenting collections strengthens the next attempt. Waiting costs time, so weigh it against the equity you wanted to pull.
A reconsideration request that adds evidence has a fair chance, while one that only argues has little. An earlier appraisal generally will not be reused for a new cash-out, so each attempt may mean a fresh report.
Frequently Asked Questions
Do I need a Form 1007 for every investment refinance?
No. The Selling Guide requires it only for a one-unit investment property when the borrower uses rental income to qualify. DSCR lenders set their own paperwork rules, and many request a rent schedule or equivalent because the property’s income carries the loan.
Can the appraiser count my Airbnb income?
Not on the standard rent schedule. That form calls for monthly market rent supported by monthly leased comps, so it cannot estimate a nightly rate. Short-term-rental income is handled through a lender’s own program method, which typically asks for about 12 months of hosting history.
What if my lease is above market rent?
Expect the market figure to cap what counts. Under a lower-of convention, a high lease does not raise coverage. The reverse is the bigger risk: a below-market lease can pull the ratio down.
Can I choose the appraiser or sit in on the inspection?
You do not choose the appraiser, because the lender orders the report. You can provide access, documents, and a comp list, and you can answer questions at the visit. Staying out of the way is usually the better choice.
Does a vacant unit hurt my appraisal?
Not necessarily. The appraiser can still conclude a market rent for a vacant unit, and many lenders use that figure. A signed monthly lease before the visit gives the appraiser real evidence, though, and it can shorten the debate about what the unit should rent for.
Next Steps
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 arranging financing through select lenders in its wholesale network, spanning 41 markets, including Washington, D.C. Call 828-256-2183 or request a quote to walk through your file.
Investors weighing their equity options can start with Lendmire’s guide to cash-out refinance on an investment property.
For current guidelines and terms, see Lendmire’s DSCR loan programs page.
About Lendmire
Lendmire — NMLS# 2371349 — is a DSCR and non-QM mortgage brokerage with investor loan programs in 41 markets, including Washington, D.C. DSCR eligibility is commonly reviewed by the lender around property-level rent rather than personal income documentation, subject to lender guidelines, and the brokerage helps arrange financing for LLC-owned portfolios beyond conventional financed-property limits. Recognized by Scotsman Guide as a Top Mortgage Workplace in 2025 and 2026.
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References
1. Form 1000/1007 Instructions
2. Selling Guide section on appraisal forms
3. NAMB
This article is part of Lendmire’s investment property cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Plan and Use a Short-Term Rental Cash-Out Refinance to Consolidate Debt · How Lenders Underwrite a Short-Term Rental Cash-Out Refinance After Moving Out · How to Qualify and Apply for a Short-Term Rental Cash-Out Refinance With 1.25 Coverage
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.