Bank requirements for mortgage on rental property

[Tony Kimbril]

If a bank requires a minimum amount of rent to meet the requirements of a mortgage, how can they verify the rent amount?

[Ty Coutts]

Great question @Tony Kimbril!

It obviously depends on what you are trying to prove/accomplish with the rent verification. Are you trying to verify the future income of a property you are purchasing, or the potential rent income of your departing residence?

In the case of departing income most lenders will look to see if there is a signed 1 year (or longer) lease in place that matches a deposit of that same stated rent amount in your bank account and that will be all they need. If you do not have a signed lease yet, the lender can order what is called a 1004 appraisal that compares local rents for similar properties in the area.

That same 1004 appraisal can be used on future rental income for a property you are purchasing. This is most common in DSCR loans where the lender is only concerned with the mortgage being covered by future rents.

Let me know if this helped answer your question, and feel free to reach out to me personally with any other questions!