Form 1007 and How Departing Residence Rent Gets Documented
Program and regulatory figures verified September 19, 2026. Details change; confirm your scenario with us.
When a lease stopped being acceptable evidence, this form went from a supporting document to the main one.
What the form is
Form 1007, the Single-Family Comparable Rent Schedule, is completed by an appraiser to establish market rent for a one-unit property. It sets out comparable rentals and reconciles them into an opinion of market rent, much as a sales comparison approach reconciles comparable sales into an opinion of value. Two-to-four-unit properties use Form 1025.
Why it carries the weight now
Until the September 2026 restructuring, a fully executed lease was the usual way to document rent on a departing residence, with a rent schedule supporting it. Fannie Mae B3-3.8-05 now states that lease agreements are not permitted for any departing residence.
The reasoning is in the policy itself: the new framework relies on market-supported rents rather than lease agreements. A lease reflects what one tenant agreed to pay, which may sit above or below market or be an arrangement between relatives. Market rent evidence is harder to arrange around.
The content formerly at B3-3.1-08 now lives at B3-3.8-01 through B3-3.8-05. Advice still citing the old section number predates this change.
The Tennessee convenience
There is a practical benefit here that is specific to how Tennessee classifies property.
Because market rent can be established from an appraisal or a Form 1007 without a tenant in place, qualifying and actually renting become separate decisions. You can document the income potential of the departing home while it is still vacant and still your principal residence.
That matters in Tennessee for two reasons. The property tax freeze applies to a principal residence, so the timing of when the house stops being one is worth controlling rather than stumbling into. And while a single-family rental keeps the 25% residential assessment ratio, anything that turns the property into two or more rental units moves it to the commercial class at 40%. Establishing rent on paper first gives you room to check both with your county trustee and assessor before anything changes. Detail on the rental conversion page.
What happens to the number
Whatever market rent is established, the qualifying calculation reduces it. Gross rent times 75%, with the remaining 25% treated as absorbed by vacancy and maintenance. Then the property's full PITIA is subtracted.
A positive result offsets that property's own payment. A negative result is added to your debt ratio. It does not become qualifying income either way, which is the single most misunderstood part of the current rule.
Timing
These requirements bind for applications dated on and after November 1, 2026, and lenders were encouraged to adopt them immediately after the September 2, 2026 publication. For a file being planned now, assume the new framework applies.
Frequently asked questions
What is Form 1007?
The Single-Family Comparable Rent Schedule, completed by an appraiser to establish market rent for a one-unit property using comparable rentals. Two-to-four-unit properties use Form 1025 instead.
Can I use a signed lease instead of Form 1007 for my departing home?
Not under the current rule. Fannie Mae B3-3.8-05 states that lease agreements are not permitted for any departing residence. Market rent must come from a complete appraisal including market rents, a Form 1007 for the occupied unit, or a market analysis supported by at least three comparable rentals.
Do I need a tenant before I can use rental income?
No. Because B3-3.8-05 establishes market rent from an appraisal or Form 1007 rather than a lease, the documentation can be produced while the house is still vacant. In Tennessee that lets you check the tax freeze and assessment consequences with your county trustee before the property stops being your principal residence.
How much of the market rent counts?
75% of gross rent, with the remaining 25% treated as absorbed by vacancy and maintenance, less the property's full PITIA. A positive result offsets that property's own payment rather than adding to qualifying income; a negative result is included in the debt ratio.
Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about financing, not a loan commitment and not legal, tax, or real estate advice. Local tax freeze adoption, income limits, and landlord-tenant rules change and depend on your facts; your county trustee, your CPA or a Tennessee attorney, and your real estate agent each handle their own part. Loans are subject to borrower and property qualification.