Using a Form 1007 market rent instead of a lease
Can a Form 1007 market-rent appraisal be used instead of an actual lease?
The Form 1007 is the standard tool for exactly the situation several other pages in this cluster describe: no lease, a below-market lease, or a lease to a related tenant. It is worth understanding on its own terms.
- DSCR rental loan using Form 1007 The Form 1007 is a standard, appraiser-completed estimate of market rent, and DSCR underwriting commonly relies on it exactly when no lease exists or the lease does not reflect current market rates.
- A borrower’s own rent estimate with no appraisal support An underwriter needs a third-party, standardized rent figure to calculate DSCR reliably — a borrower’s own estimate is not that, regardless of how accurate it turns out to be.
Lenders in the directory
No lender here publishes a rule for this
This is an underwriting judgment, not a published threshold. None of the 37 lenders in the directory states a policy on it, so there is no honest way to build a shortlist — and a list computed only from which products a lender writes would tell you nothing you could act on.
What matters here is how the file is presented rather than which lender receives it. The sections below cover that. When you are ready to approach lenders, the directory shows what each one does publish, with the date it was verified.
What a Form 1007 actually is
It is a standardized appraisal exhibit — the same appraiser handling the property’s valuation completes it — that estimates fair market rent for the subject property based on comparable rental properties in the area. It is a professional, third-party estimate, not a lease and not a borrower’s own projection.
When it is used instead of a lease
A vacant property, a property between tenants, or a purchase where the buyer has not yet placed a tenant all have no lease to hand a lender, and the Form 1007 fills that gap with a comparable-based estimate instead.
When it is used alongside an existing lease
Even where a lease exists, some lenders order or reference a Form 1007 as a check against a below-market or non-arm’s-length lease, using the appraisal figure, the lease figure, or the lower or higher of the two depending on lender policy.
What it does not do
A Form 1007 estimates market rent — it does not guarantee that rent is achievable immediately, and it does not account for lease-up time, tenant screening, or local rent-control rules that might cap what can actually be charged.
What to have ready
- Confirmation with the lender on whether a Form 1007 is required and who orders it
- Any existing lease, so it can be compared against the appraisal figure
- Realistic expectations about lease-up time if the property is currently vacant
Questions
Who completes the Form 1007?
Does a Form 1007 replace the need for an appraisal?
Can rent control affect the Form 1007 figure?
Terms used on this page
- Form 1007 (Single-Family Comparable Rent Schedule) — Form 1007 is a one-page appraisal addendum, ordered alongside the standard appraisal on a one-unit property, in which the appraiser identifies comparable rentals and reconciles them to a single opinion of the property’s market rent.
- Debt Service Coverage Ratio (DSCR) — DSCR is a property’s gross monthly rent divided by its total monthly mortgage payment. A DSCR of 1.00 means the rent exactly covers the payment; 1.25 means rent exceeds the payment by 25%.
- Form 1004 (Uniform Residential Appraisal Report) — Form 1004, the Uniform Residential Appraisal Report, is the standard appraisal form for one-unit residential properties. It documents the property, the neighborhood, and comparable sales, and reconciles them into a single opinion of value.
- Market Rent vs. Actual Rent — Market rent is an appraiser’s opinion of what a comparable unit should currently rent for. Actual rent is the contract rent stated in an existing lease. The two frequently differ, and which one a lender uses to qualify a loan depends on the lender’s policy.