Counting rental income to qualify for a four-plex?

Question

Are there any lenders or particular programs that will allow you to count rental income to help qualify for an owner-occupied multifamily property? Four-plex in particular.

Shaun Weekes · Answer

@Sarah Lorenz

Absolutely.  Conventional loans have no seasoning anymore so 2 years isn't the case.  You can use lease agreement right away.  Conventional lenders with no OVERLAYS will take 75% of the lease agreement and FHA will take 85% of lease agreement.

PM me or ask away if you need anything else explained.

Wes Brand · Answer

@Sarah Lorenz Yes, there are lenders that will. I don't know if there are lenders in your area that will, but keep searching -- try smaller banks doing portfolio loans. Commercial / big banks will count the rents after seeing them on the books for 2 years. Portfolio lenders will count them after anything from "signed leases only" to "2 years", you can also look at taking out a commercial loan instead of a residential one -- in that case the property's income is the only thing that matters, but the loans are typically a little different (different rates, sometimes better, sometimes worse, more down, etc)

Shaun Weekes · Answer

@Sarah Lorenz

If Fannie Mae, Freddie Mac or any Investor says that you need 6 months or $5k for something and the lender asks for more than that.  That's an OVERLAY.  It's anything in addition to what the investor is requiring from you.

I hope this helps and send me a PM or @ so that I know you're asking a question :)

Sarah Lorenz · Answer

Thank you!

What are overlays?

Charles Morgan · Answer

Most lenders should count it if you have a two year+ history in your Federal taxes.

Counting rental income to qualify for a four-plex?

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