The Quick Read: Yes, in practice nearly every DSCR purchase or refinance goes through a full appraisal that includes a rent opinion, and on a one-unit rental that rent opinion is the 1007 schedule. No federal rule requires either one, so the requirement comes from lender guidelines, and the lender’s own guidelines decide what gets ordered on your file.
- The appraisal produces two numbers: value, which drives leverage, and market rent, which drives the coverage ratio.
- A one-unit home or condo uses the 1007; a 2-4 unit property uses the 1025, which bundles value and per-unit rent.
- On a leased property, most programs use the lower of the lease or the appraiser’s market rent.
- True no-appraisal programs are rare, and they are the exception, not the plan.
- The standalone 1007 is changing shape on the agency side, but the rent analysis is not going away.
Why Does a DSCR Loan Need an Appraisal at All?
DSCR files need an appraisal because the lender is lending against the property, not the borrower’s paycheck. The report sets the value that caps the loan amount and the rent that feeds the coverage ratio. One order, two answers.
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Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Oct 15, 2026
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As of Oct 15, 2026 · General Freddie Mac market benchmark, not a Lendmire loan offer. Rent, nightly rate, occupancy, taxes, and insurance are editable estimates. Short-term rental figures are estimates only and vary significantly by season, property type, management approach, and local short-term-rental rules — confirm local regulations before relying on them. 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.
Here is how the ratio works: monthly rent divided by monthly PITIA (principal, interest, taxes, insurance, and any HOA dues). The rent figure in that division is the one the appraiser supports, not the one in your spreadsheet. 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, and that review leans on the property itself.
Across the wholesale network, purchase files typically land at 75%-80% LTV, and a rate-and-term refinance can reach a higher ceiling at 85% on select programs. Cash-out refinances top out at 75% LTV on standard rentals. Every one of those percentages is applied to appraised value (or the lower of price and value on a purchase), so a weak valuation shrinks proceeds before rent ever enters the picture. All of this is subject to lender guidelines and credit review.
What Is the 1007 Rent Schedule?
The 1007 is the single-family comparable rent schedule, a short form the appraiser attaches to the appraisal on a one-unit investment property. According to the Freddie Mac and Fannie Mae form, it gives the appraiser a familiar format to estimate the subject’s market rent. The form calls for three comparable rentals and says adjustments should be made only for items of significant difference between the comparables and the subject.
It also asks for commentary on vacancy and the trend of rents. So the output is not a guess. It is an indicated monthly rent, built from leased comparables, with adjustments for size, condition, and location.
What the 1007 does not do:
- It does not set value. Value for a one-to-four unit property comes from the sales comparison approach, not from rent.
- It does not reflect your pro forma, a listing estimate, or a rent-estimator site. Those carry little weight against comparable leased rentals.
- It does not convert nightly short-term rates into a monthly figure. More on that below.
The form is an agency form that the non-QM market borrowed. It is a lender convention, not a regulation. Nobody in government mandates it for investor loans, and no regulator publishes a requirement that a DSCR lender must order one.
Which Form Applies to Your Property Type?
The form follows the property. Most DSCR appraisals pair a value report with a rent document, and the pairing changes with the unit count.
| Property type | Value report | Rent document |
|---|---|---|
| Single-family home | Standard full appraisal | 1007 rent schedule |
| Condo | Condo appraisal form | 1007 rent schedule |
| 2-4 units | 1025 (value and per-unit rent) | 1025, sometimes plus a 216 |
| 5+ units | Typically income-based | Set by lender guidelines |
An appraisal management company explainer notes that a DSCR appraisal usually pairs the value report with the 1007 and, for income-producing properties, the 216 operating income statement, depending on property type and investor. The 216 adds an operating-income view on top of the rent figure. It is not on every file.
Five-plus unit properties are a different animal. Those are generally treated as commercial-style income properties, and the lender’s own guidelines decide the report type.
Not offered in the network: manufactured homes (single- and double-wide), log homes, and barndominiums. No appraisal form fixes that, so don’t spend money ordering one.
Is the 1007 Always Required?
On most programs, yes. A rent opinion is part of nearly every standard DSCR order. What changes by file is which rent figure the underwriter uses, not whether the appraiser provides one.
| Scenario | Rent evidence used | Notes |
|---|---|---|
| Vacant purchase | Appraiser’s market rent | No lease to compare against |
| Leased purchase | Lower of lease or market rent | Lease and proof of payment go in the file |
| Leased refinance | Lower of lease or market rent | Same convention |
| Short-term rental | Program-specific | See the STR section |
| 2-4 units | Per-unit market rent on the 1025 | Lease evidence per unit |
The practical rule on a leased property: an above-market lease adds nothing, and a below-market lease caps the ratio at the lease figure. A few lenders in the network lean on actual rent instead of the lower-of convention. Those are program-specific, so ask before assuming.
So can a lease substitute for the rent schedule? Rarely. The lease is evidence that goes into the file next to the appraiser’s number. It does not replace it. And can you skip the appraisal entirely? Some programs advertise it. In practice the exception is thin. Where an appraisal is waived, that is usually an automated valuation model, and it tends to be limited to specific programs and smaller balances.
Why a Conventional-Loan Rule Doesn’t Control Your DSCR File
DSCR loans are not agency-delivered. The 1007 exists because the agencies built it, and many DSCR lenders adopted it because the same appraiser panels already know it. Seeing the form on both sides of the market doesn’t make agency rules binding on a DSCR loan.
That matters because search results for this question mix the two. Conventional guidance on when rental income can be used to qualify has nothing to say about how a DSCR lender sets leverage or counts rent. The lender’s current guidelines decide. Treat any agency-based answer as background, not as your file’s rulebook.
Which Rent Counts When Lease and Appraisal Disagree?
The lower of the two usually counts. Run the numbers this way, using modeled assumptions only: say the executed lease supports rent that would cover PITIA at about 1.30x, while the appraiser’s market rent supports only about 1.10x. Underwriting uses the 1.10x. Flip it, with a below-market lease and stronger market rent, and the lease sets the number instead.
This is where investors get surprised. They price the deal on the lease, the appraiser lands lower, and the ratio moves. The same pattern shows up when a borrower believes the unit can rent for far more than the comps show. The appraiser’s opinion, not the pro forma, is the number the file carries.
One more caution. Clearing 1.00x is not positive cash flow. DSCR compares rent to PITIA only. Repairs, vacancy, management, utilities, and capex sit outside the ratio. A file can clear coverage and still run thin in real life.
Two Failure Modes: Low Value and Low Rent
The two outputs fail independently, and each hits a different part of the file.
| Problem | What it moves | Typical consequence |
|---|---|---|
| Value below contract price | Loan amount at a given LTV | More cash to close or a smaller loan |
| Rent below your model | The coverage ratio | Tighter pricing, lower leverage, or a missed floor |
Most standard programs start at a 1.00x floor, and stronger ratios open better pricing and leverage. If a low rent drops the file under 1.00x, a separate select-lender path takes coverage below 1.00 with leverage and terms adjusted. Eligibility depends on credit, reserves, and property review. A larger down payment lowers the payment and can lift the ratio, but it never erases leverage caps, credit floors (620 in parts of the network, around 660 on most programs, 700+ for the strongest tiers), or reserve rules.
If the rent comes in low, the usual remediation steps are:
1. Review the comps the appraiser used and check them against the subject’s size, condition, and location.
2. Gather recent leased rentals nearby that the appraiser may not have seen, and submit them for appraisal reconsideration through the lender.
3. Confirm the lease and proof of payment are in the file for a leased property.
4. Re-run the ratio at a lower loan amount, or restructure the term.
5. Ask the lender whether a different program treats the rent evidence differently.
Reconsideration has limits. It works when the comps are real and relevant, not when the borrower simply disagrees with the number.
Short-Term Rentals and the 1007
The 1007 reflects a traditional twelve-month lease, so it often lands well below what a hosted property earns. A nightly rate multiplied by thirty days is not market rent in the eyes of an appraiser.
STR-specific programs exist and use different income evidence. Across the network, STR purchase leverage tops out at 75% LTV, refinance runs around 70%, and cash-out is 70%. Expect a 640+ score and about 12 months of hosting history. The coverage floor is 1.00 on purchases and refinances. Treat each transaction type on its own terms, because they are not interchangeable. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
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.
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.
Ordering, Timing, and Who Does What
The lender, through the wholesale channel, orders the appraisal, and the rent schedule has to be on the order at intake. The same appraisal-industry explainer says the forms must be ordered at the start, and that discovering in underwriting that the 1007 was never requested forces a re-trip or an addendum. That is a file-mechanics point worth repeating. A missed rent form costs a second visit.
The borrower pays for the appraisal and has no say in the appraiser choice. The borrower’s job is access, tenant coordination, and documents. For a leased property, the file typically holds the appraisal and rent schedule, plus the executed lease and proof of payment.
Budget for the appraisal fee and the added work of the rent schedule. Cost and turn time vary by property and location, so ask for the actual figure when the order goes in.
What Is Changing With the 1007?
The standalone form is being retired on the agency side. Fannie Mae’s appraiser update says the mandate for its new appraisal format takes effect on Nov. 2, 2026, and that under it Form 1007 is not used. Market rent is reported inside the Rental Information section and Rental Comparison Grid instead.
DSCR loans aren’t delivered to the agencies, so that mandate does not bind them. But the same appraisers will be working in the new format. Expect “1007” to become shorthand for the rent analysis, not always a separate document. Whether a given DSCR program still requests a standalone 1007 or accepts the rent section of the new report is a lender-guideline question. Ask at intake. The rent analysis itself stays, because the coverage ratio still needs it.
Key Terms Defined
Appraisal: a licensed appraiser’s opinion of the property’s value, used to set the maximum loan amount. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
1007 rent schedule: the appraiser’s comparable-rent form for a one-unit rental, giving an indicated market rent.
1025: the form for 2-4 unit properties that covers value and per-unit market rent in one document.
216 operating income statement: an add-on form that shows income and expenses for an income-producing property.
Market rent: what the appraiser concludes the property would lease for, based on comparable rentals.
PITIA: principal, interest, taxes, insurance, and any HOA dues, the monthly obligation in the denominator of the ratio.
Common Misconceptions
“DSCR means no appraisal.” It means no personal income documentation, because qualification runs on the property’s income. The property still gets valued.
“My lease sets my ratio.” Underwriting typically uses the lower of the lease and market rent.
“The 1007 is a federal requirement.” It is an agency form used by the investor market. No rule mandates it for these loans.
“A rent-estimator or listing estimate can replace it.” Those carry little weight against appraiser comps.
“The lender appraises the property.” The appraiser does. The lender reviews the report.
“If the 1007 is retiring, rent analysis is too.” The form is changing, not the analysis.
Practical Next Steps
Underwrite your own deal on the lower of lease or market rent before you make an offer. Confirm up front how the program treats short-term income if that is your plan. Ask whether the lender wants the 1007 or the rental section of the new report. Collect the lease, proof of payment, entity documents, and insurance quote early so the file has fewer preventable gaps. Qualification stays subject to lender guidelines, credit approval, and property review. Tax treatment varies; consult a qualified professional.
For program mechanics, Lendmire’s complete DSCR loans guide covers leverage, credit tiers, reserves, and property eligibility. Reserves vary by lender, leverage, and loan size, commonly around 6 months of PITIA, stepping up to about 9 months above $1,500,000. For the appraisal side in more depth, see Lendmire’s piece The DSCR Appraisal: 1007 Rent Schedules, Comps, and What Gets Ordered. And if the rent figure disappoints on a hosted property, Lendmire covers how to save an STR loan after a low 1007 rent schedule.
Frequently Asked Questions
Can a lease replace the 1007 rent schedule?
Rarely. The lease goes into the file as supporting evidence, and underwriting typically uses the lower of the lease and the appraiser’s market rent. On a vacant property the appraiser’s figure is the only rent in play.
Can I skip the appraisal on a DSCR loan?
Almost never. A few programs use automated valuation or desktop products, usually on smaller balances, but they are exceptions. Plan on a full appraisal with a rent opinion, and treat anything else as a bonus.
Why did my numbers change after the appraisal?
Because the appraisal replaces your assumptions with documented figures. Value can come in under the contract price, which lowers proceeds at a given LTV, and market rent can come in under your model, which lowers the coverage ratio.
Does a condo need a 1007?
Yes, in most cases. Condos pair a condo appraisal form with the 1007, and the HOA questionnaire and condo certification are separate items the lender also reviews.
Do 2-4 unit properties use the 1007?
No. They use the 1025, which captures value and per-unit rent in a single document. A 216 income statement is sometimes added.
About Lendmire
Lendmire is a non-QM mortgage brokerage (NMLS# 2371349) arranging DSCR investor loans in 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed around property-level rental income rather than personal income, subject to lender and program guidelines, a fit for self-employed investors and LLC-owned portfolios. Lendmire was recognized as a Scotsman Guide Top Mortgage Workplace in 2025 and 2026.
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References
1. Freddie Mac Form 1000 / Fannie Mae Form 1007
2. R3 AMC explainer on DSCR appraisal forms
3. Fannie Mae Appraiser Update
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Finance an Airbnb Through an LLC With a DSCR Loan · No-Ratio DSCR Loan vs Delayed Financing: Which Fits? · Individual DSCR Loans vs. a Blanket DSCR Loan for Three Airbnbs
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.