Using rental income for mortgage app
If you have a unit that rents for 500/month and from that unit you cash flow only 150 monthly and you have over two years documented income on tax returns, you will only be allowed to use 75% of that "cash flow" income for a mortgage app??
I have a rental and I have had it for over two years but I have a modest salary and I plan to purchase a home in a year or two from now so I would love to use my rental income to qualify my mortgage. I'm aware that in the mortgage world 150/month in extra qualifying income on a 30yr note might only amount to an additional 25k in purchase power, where 500/month might allow for an additional 100k in purchase power.
Thoughts??
Most Popular Reply
How I understand it (and from my experience), unless the property is a large multifamily or commercial, the amount of rent you receive from it (cash flow) won't directly factor in. The lender is going to weigh heavily on your credit history/credit score, your current debt and liabilities, the amount and stability of your income and assets, documentation from your tax returns, and the condition/value of the property being mortgaged.
If I were in your situation, I would interview several lenders and find out what they require and what they value. Be aware of how to position yourself prior to applying for a mortgage loan or other type loan, as well as the "Dos and Don'ts" to follow during the application and processing period.