Does a DSCR Loan Require an Appraisal?
By Travis Penny, mortgage broker ·
Last updated October 19, 2026
Yes. A DSCR loan almost always requires a full appraisal, and on most files the appraiser also completes a market rent schedule. That one report does two jobs. It sets the value your loan is based on, and it can set the rent used in the DSCR ratio. If you are planning a rental purchase or refinance, the appraisal is the step that decides whether the numbers you ran hold up.
I arrange DSCR loans on investment property only, in the 37 states where I arrange DSCR loans. For the full list of what gets checked on a file, see my DSCR loan requirements guide.
Why a DSCR loan needs an appraisal
A DSCR loan qualifies on the property instead of your personal income. Because the property carries the loan, the lender needs an independent opinion of two things: what it is worth and what it should rent for. Automated value estimates and appraisal waivers that show up on some owner occupied loans generally are not used on DSCR loans.
What the appraiser looks at
Value. Comparable sales set the market value. On a purchase, the loan is based on the lower of the price or the appraised value. On a refinance, the appraised value sets how much you can borrow.
Market rent. On a single unit rental the appraiser fills out a rent schedule, often called a 1007. On a 2 to 4 unit property, the small residential income form covers rents for each unit. That market rent is how a vacant property or a fresh rehab can still qualify.
Condition. Safety items, missing kitchens or baths, roof problems and unfinished work can all hold a file up. If the house needs work, plan for that before the appraisal is ordered.
Lease rent vs appraiser rent
If you already have a tenant, the lease matters, but the appraiser's market rent still gets compared to it. Depending on the program, the rent used can be the lease, the market rent, or the lower of the two. Short term rentals follow their own rules, which I cover on my short term rental loans page.
What happens if the appraisal comes in low
A low value usually means a bigger down payment on a purchase or less cash out on a refinance. A low rent figure can push your ratio below what the program wants. Sometimes a reconsideration with better comparable sales or rentals helps. Sometimes the right move is a different program or a different property. I would rather tell you that before you spend more money.
How to set up a good appraisal
Have leases, a rent roll and a list of improvements ready. Make sure every unit can be accessed. Finish the punch list if you are refinancing after a rehab. If you are doing a BRRRR plan, my BRRRR loans page explains how the appraisal sets the cash out refinance after the work is done.
Before you order anything, run the rent and the full payment through my DSCR calculator so you know what the appraisal needs to support. Then send me the address. I'll tell you quickly if the rent covers the loan.
FAQ
- Does a DSCR loan require an appraisal?
- Yes. A DSCR loan almost always requires a full appraisal. Appraisal waivers that show up on some owner occupied loans generally are not used on DSCR loans.
- What is a 1007 rent schedule?
- It is the appraiser's market rent report for a single unit rental. It estimates what the property should rent for, and on many DSCR programs that figure sets the rent used in the ratio.
- Can a vacant property get a DSCR loan?
- Yes. The appraiser's market rent can be used when there is no tenant in place, so a vacant rental or a finished rehab can still qualify. Not everyone will qualify.
- Who pays for the DSCR appraisal?
- The borrower usually pays for the appraisal, typically once the loan is moving forward. Multi unit and higher value properties tend to cost more to appraise.
- What if the appraisal comes in low on a DSCR loan?
- On a purchase you may need a larger down payment or a price change. On a refinance you may get less cash out. A reconsideration with better comparables sometimes helps, and I review other options with you.
- Does the appraiser use my lease or market rent?
- Both get compared. Depending on the program, the rent used can be the lease, the appraiser's market rent, or the lower of the two.
- Is a DSCR loan only for investment property?
- Yes. DSCR loans are for investment and rental property only. I arrange them in 37 states, and in Montana the loan closes in an LLC.
Does the rent cover the payment?
Enter the rent and the full monthly payment to see the DSCR on a property before you make an offer.
Run your numbers