Does AibNb/STR income qualify for new mortgage?

Question

Specifically, if it's NOT your primary residence?

Anyone has experience with this yet? Seems like legislation is just now starting to catch up but after doing research, I still couldn't find a clear answer.

Parker Borofsky · Answer

If you have filed your taxes and this income is reflected on schedule E then yes it can be used as rental income for a Conventional mortgage.  One difference between LTR and STR rental income is that LTR income can be used immediately at 75% of an active lease amount vs STR must be reflected on taxes.  We also allow projected rental income when you are purchasing so 75% of the fair market rent value as deemed by the appraiser can be used as you are purchasing.  Whether or not the appraiser will use STR or LTR for this calculation will depend on the market.  Hope that helps!

Parker Borofsky · Answer

@Lucas Carl is also correct, if the income is reflected on schedule C (self employment) or on a business return I.e. LLC or Parntership - then 2 years history is typically required.  If it is on schedule E then it can be used after being filed.

Luke Carl · Answer

@Ada Tor If it’s schedule E and it’s on YOUR tax return then yes. Schedule C will take 2 years.

If you’re asking about the income it’s making with a previous owner then no not at all.

I assume you’re looking to buy the property and DTI is the issue? If so a good loan person can count projected long term income in your favor IF you’re doing an investment loan (not as a second home).

Please confirm with @Parker Borofsky

Parker Borofsky · Answer

@justin tahilramani it sounds like that particular lender may have had an overlay requirement for the lease, or there was something about your particular situation that required it.  This is not a typical request if a schedule E is already reflecting stable income from the property.

Julie McCoy · Answer

What @Parker Borofsky said (and @Lucas Carl summarized nicely).  Parker was able to use my Schedule E income from last year (along with my W2) to help me purchase two new STRs this year.  Because of DTI I know I was a challenging client!  But after this year's taxes get filed with the fresh Schedule E income from the new STRs, I'm going to be in great shape to pick up new investments in 2019.  :)

Kyler J Sloan · Answer

If someone is "house-hacking" a multi-family property consisting of (3) units, and wants to use the projected rental income generated by it to help them qualify for the total amount, will they use that income expected from (2/3) of the units?

Justin Tahilramani · Answer

I agree that you will have a much better chance if you have two years of tax returns to show income. That said - my last cash out refi required that I provided a copy of the lease. Im not sure how that portion would work with an STR.

Does AibNb/STR income qualify for new mortgage?

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