Calculating rental income

[Carlyle Gianni]

Hi BP Family - I'm trying to get clarification on something as I seem to get conflicting information from different lenders. How is rental income calculated for your DTI? I had one lender say they took 70% of the rental income from the last two years (as an average of 2 years), and someone else say they only look at the income on the tax return for the rentals (which is negative because of the bonus depreciation we took). Is there a standard way of calculating income for long term rentals?

[Kevin Luttrell]

For any conventional Fannie/Freddie financing, rental income will be calculated from the sch E of your most recent filed tax return. Certain things like depreciation are added back in and not counted against your qualifying rental income. 

[Gross rents - total expenses + insurance + mortgage interest + property taxes + depreciation + HOA dues(if applicable)] / 12 = qualifying monthly rental income.