AirDNA vs. 1007: Which Income Can a DSCR Lender Use?
Two very different ways to estimate a property's qualifying rental income — and why the difference matters.
By Ryan Kennedy, NMLS #1434300 · Orlando Mortgage Broker, Icon Mortgage Group
Two very different ways to estimate a property's qualifying rental income — and why the difference matters.
By Ryan Kennedy, NMLS #1434300 · Orlando Mortgage Broker, Icon Mortgage Group
One of the most common points of confusion for Orlando investors is why two different lenders can quote wildly different qualifying income for the exact same property. Usually, it comes down to which income source they're using.
The Fannie Mae Form 1007 (Single-Family Comparable Rent Schedule) is an appraiser-prepared estimate of what a property would rent for on a standard 12-month lease, based on comparable long-term rental listings. It's the traditional method used across conventional and most DSCR long-term-rental underwriting.
For Airbnb and VRBO properties, a 1007 dramatically understates the property's actual earning potential, since short-term rentals typically generate more revenue than a long-term lease on the same home. A short-term rental income report (AirDNA is the best-known provider, though DSCR lenders may use their own approved vendor) estimates projected nightly-rental revenue based on comparable short-term listings in the same submarket.
Because short-term rental income is usually significantly higher than the 1007's long-term estimate, using the correct income type can be the difference between a DSCR loan that clears easily and one that doesn't qualify at all. Not every DSCR lender accepts short-term rental income reports — this is one of the most important questions to ask upfront if you're buying specifically as an Airbnb investment.
If the property already has rental history (yours or the seller's), some programs will let you use actual trailing income instead of — or in addition to — a projected report, which can sometimes produce an even stronger number if the property is already outperforming projections.
If you're buying a property specifically to run as a short-term rental, make sure your lender is actually underwriting it as one. Being quoted long-term 1007 rent on a property you plan to run as an Airbnb can understate what you'll actually qualify for.