when can you add rental income when applying for a mortgage

2 Replies

When applying for a loan, when can you add your rental property income into the equation? I have heard that you have to wait a full year before a lender will accept it. Can anybody confirm or deny? Also, if it is a full year, what would happen if that tenant would move after that year? Would you have to wait another year after that?

Hi Josip,

Your question depends on the financing. If you're using "conventional financing" you will actually need 2 years of landlord history before they will count 75% of the rental income toward your income. If the unit is vacant they will use 75% of the projected rents.

Smaller local banks may have different requirements, some are one year, some are immediate. You will need to call around to the different banks to see what their policies are but again if you're using conventional financing you'll have to wait 2 years. 

Best of luck!


@Josip Galic  @Eric Black  

If a conventional lender is able to choose to just use Fannie Mae, a two year history isn't required. 

Fannie Mae uses 75 percent of rent on lease or 75 percent of calculated potential income if the property is not leased. This is using the average rent for the area determined by the appraiser. So Fannie Mae requires a 25 percent vacancy factor, when the property's net income is too early to reflect on tax returns. 

Freddie Mac requires a two year history. 

A conventional lender must have the ability to choose between using Freddie Mac or Fannie to avoid a two year history. 

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