Duplex, trying to refinance - Can we use new rental income?

Question

Hello,

Trying to help my ex wife refinance a duplex that her and her Dad (retired, min income) own, she tried a few months ago but there was not enough income to support it so new plan:

Have her Dad move in with her so they both will live in one side

Rent the other side which could add another additional $2500 per month income and should solve the debt to income issue.

Question - What kind of proof of this new rental income will the Banks be looking for? Will a Rental Contract be enough or will they be looking for months worth of deposits in bank statements, years in tax returns or ???

Thanks..

CalRehabber..

Mike Jones · Answer

Thanks, this helps..

I'm still trying to figure out which Lenders might qualify a percentage of the new rental income even though we cant show that income going back 2 years since we just started renting it out.

Sean Kuhn · Answer

That is with an non owner occupied loan, which you would have to do.

Sean Kuhn · Answer

I believe my lender would say that 75% of that rental income can be used. Instead of a bank try a private mortgage broker.

Joseph Pytcher · Answer

Hello, to answer your question, all you need is an executive lease agreement. They will look at your previous years tax returns to verify income.

Mike Jones · Answer

Thanks Guys..

We need to try and find an Institution that will allow some potential rental income based on new rental income since we do not have up to 2 years shown on tax returns can any one suggest such Banks?

We do have a Rental Contract in place and a few months of income that we can provide.

Thanks!

Calrehabber..

Aaron Junck · Answer

I think what @Dawn Anastasi  is trying to say is that if they dont have a track record of real estate rental income on 2 years tax returns that they will have to qualify based on their income alone. Some banks will allow you some potential rental income such as 75% and thats with a signed rental agreement. My understanding is though that you need to have some track record in order to use it unless its a larger property.

Dawn Anastasi · Answer

I thought that some banks require a minimum of X years of rental income before it qualifies.