On a DSCR loan, the appraiser does two jobs: value the property and estimate its rent. The rent estimate often decides your loan more than the value does.
In short: The rent schedule, often called Form 1007 or the comparable rent schedule, is the part of the appraisal where the appraiser estimates market rent using similar rentals nearby. DSCR lenders use that figure, or the lease rent if the program allows, to calculate whether rent covers the payment. If market rent comes in lower than you expected, DSCR drops and you may need more cash down, a different program or a sub-1.0 or no-ratio option. You can improve your odds by sending the appraiser good rent comparables and making the property easy to evaluate.
For one-unit properties, the rent schedule is Form 1007, a single-family comparable rent schedule attached to the appraisal. For 2–4 unit properties, rent analysis is built into the small residential income property appraisal, often called Form 1025.
The appraiser picks several nearby rentals, adjusts for differences like size, bedrooms and condition, and arrives at an opinion of monthly market rent for your property.
DSCR is qualifying rent divided by the full monthly payment: principal, interest, taxes, insurance and any HOA dues. The rent schedule is where that qualifying rent usually comes from.
If the property is leased, many programs use the lower of the lease and market rent. Some use the lease when it is higher and documented. On a vacant purchase, market rent from the schedule is typically the only number.
| Property status | Qualifying rent (common approach) |
|---|---|
| Vacant purchase | Market rent from the rent schedule |
| Leased, lease below market | Lease rent on lower-of programs |
| Leased, lease above market | Market rent, or lease on some programs with proof of payment |
| Short-term rental | Projected revenue or history, not the 1007 alone |
This example is illustrative and not a quote. An investor buys a house for $260,000 expecting $2,200 in rent. At 80% LTV the loan is $208,000. At a sample rate of 7.25% on a 30-year fixed, principal and interest is about $1,419. With $500 for taxes and insurance, the payment is about $1,919, and DSCR at $2,200 would be about 1.15x.
The rent schedule comes back at $1,800. DSCR drops to about 0.94x ($1,800 / $1,919). One fix is a smaller loan. At $190,000, about 73% LTV, principal and interest is about $1,296, the payment is about $1,796 and DSCR is about 1.00x. That takes $18,000 more cash at closing.
Start by reading the comparables. A low number sometimes comes from rentals that are smaller, older or in a weaker pocket of the neighborhood.
If the comparables are a fair match, adjust the deal rather than fight the number.
You cannot tell an appraiser what number to reach, but you can make sure they have good information. Send it through your loan contact, not directly, unless the lender says otherwise.
Pull three to five recent rentals that match your property in bedrooms, size and condition, with rents and dates. Include the current lease and a list of upgrades if the property has been renovated. Make sure the unit is clean, accessible and shows any recent work.
Before you make an offer, test your deal at a rent 5% to 10% below your estimate. If it still clears 1.0x, a low rent schedule is less likely to derail the loan.
Our financing team can review the property and likely rent before you order the appraisal and come back with 2–3 options, including what happens if rent comes in light.
It is the single-family comparable rent schedule attached to an appraisal. The appraiser uses nearby rentals to estimate market rent for the property.
Usually not. Rent analysis for 2–4 units is part of the small residential income property appraisal, commonly Form 1025.
Many programs use the lower of the two. Some use a higher lease with proof of payment. It varies by program.
Many lenders allow a reconsideration of value with better comparables. It is not always successful, so plan a fallback.
You can put more down, use a program that allows a sub-1.0 ratio, or look at a no-ratio DSCR program. Each has its own pricing and leverage.
Usually not on its own. STR DSCR loans qualify on projected revenue or booking history, depending on the program.
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