Form 1007 and How Departing Residence Rent Gets Documented
Program and regulatory figures verified September 19, 2026. Details change; confirm your scenario with us.
In a state where signing a tenant costs you a tax exemption retroactively, being able to value the rental option without one is worth more than it sounds.
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, reconciling comparable rentals into an opinion of market rent. 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 departing-residence rent. Fannie Mae B3-3.8-05 now states that lease agreements are not permitted for any departing residence, and the content formerly at B3-3.1-08 has moved.
Market rent must instead come from a complete appraisal including market rents, a Form 1007 for the occupied unit, or a market analysis tool supported by at least three comparable rentals.
Why this is unusually helpful in Michigan
Michigan attaches a real penalty to leasing a departing residence. If a property subject to a conditional rescission is leased, MCL 211.7cc(5) directs the tax collecting unit to deny the rescission, retroactive to December 31 of the preceding year.
Under the old federal rule, using rental income meant producing a signed lease, which meant placing a tenant, which meant triggering that denial. The two rules were in direct conflict.
They no longer are. Because B3-3.8-05 takes market rent from an appraisal or a Form 1007, you can establish exactly what the property would rent for while it sits vacant and listed, with the exemption fully intact. The analysis costs you nothing in tax terms; only an actual tenancy does.
So the sensible order in Michigan is: document the market rent, price the structure with the lost exemption included, then decide. See the rental conversion page.
What happens to the number
Gross rent times 75%, 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; a negative result is added to your debt ratio. It does not become qualifying income either way.
Six months of PITIA reserves apply on the vacated property where the borrower has less than 12 months of property management experience.
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.
Can I use a signed lease instead of Form 1007?
Not for a departing residence. Fannie Mae B3-3.8-05 states that lease agreements are not permitted for any departing residence; market rent must come from an appraisal including market rents, a Form 1007, or an analysis supported by at least three comparable rentals.
Can I value the rental option without losing my Michigan exemption?
Yes, and that is the useful part. None of the accepted methods requires a tenant, and MCL 211.7cc(5) is triggered by leasing rather than by valuation. You can document market rent while the house stays vacant and listed with the conditional rescission intact.
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.
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. Principal residence exemption eligibility and conditional rescission rules depend on your facts; your local assessor, your CPA or a Michigan attorney, and your real estate agent each handle their own part. Loans are subject to borrower and property qualification.