Using Rental Income to Qualify for A Mortgage [Mortgage Qualification] |

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Күн бұрын

Using rental income to qualify for a mortgage - So there's several rules around this and it depends what kind of loan that you're getting on the purchase so the first type of purchase I'm going to talk about is you're buying the first scenario is you're buying a new primary residence so you live in a house now and you want to rent that house out and you want to go to the next house which a lot of people do so within this there's two sets of rules. Number one if the loan that you're going to the new house is going to be an fha loan then you are not allowed to use the rental income from what we call your departing residence.
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Пікірлер: 93

@jadeagles20 2 жыл бұрын

Hi Jen, thank you for the great video! Newly subscribed! I just bought my first house in November with 65k+ equity built-in (probably more with paying it down, renovations, and appreciation in the market)... I want to cash out refi after a year to avoid capital gains, then use the money towards a down payment on possibly two investment properties...where I put 20% down on each as a conventional loan to avoid PMI, would the 75% of potential market rental income be applicable to two homes bought simultaneously or close together, does doing a cash-out refi right before this affect my chances of completing this? Thanks, Jimmy

@LoanWithJen 2 жыл бұрын

Hello! Great! Yes, at the time of purchase, the 75% of market rent is used to offset the payment on the property you are purchasing on investment. Good luck!

@feliciakaye6747 Жыл бұрын

Omg thank you for this info! I’ve been researching and this is what I needed!

@LoanWithJen Жыл бұрын

Awesome Felicia! Thanks for watching!

@harryherber2971 2 жыл бұрын

Thanks for clarify these requirements Jennifer. 🤠👍

@LoanWithJen 2 жыл бұрын

Thanks for watching Harry!

@thoyo Жыл бұрын

Quick, concise, and easy to understand. Thanks!

@LoanWithJen Жыл бұрын

Thankyou!

@Thejasonrogers 11 ай бұрын

This is EXACTLY why I was confused about. Thank you so much!!! Your a very good teacher

@LoanWithJen 11 ай бұрын

Thank you Jason! Appreciate the feedback! Keep watching!

@jamesvelvet3612 2 жыл бұрын

Pure gold at 3:55 TY for the info!

@LoanWithJen 2 жыл бұрын

Thanks for the kudos James!

@emawussi Жыл бұрын

Thank you for the information

@mirzauamerici2286 2 жыл бұрын

Thanks for explanation.

@LoanWithJen 2 жыл бұрын

Thanks for the kudos Mirza!

@luisrivera5314 11 ай бұрын

Thanks a lot. Very important information. I just subscribed!

@LoanWithJen 11 ай бұрын

Thank you so much luis!

@rubenchavez1747 Жыл бұрын

Thank you!!

@LoanWithJen Жыл бұрын

Thanks for watching Ruben!

@muhammaddaniyalisrar3879 10 ай бұрын

Excellent 🎉

@LoanWithJen 10 ай бұрын

Thank you! Cheers!

@armengharibian8606 2 жыл бұрын

thank you

@LoanWithJen 2 жыл бұрын

Thanks for the kudos!

@yume816 Жыл бұрын

Similarly, if you rent the rooms in your primary, can you and how to exclude that mortgage for a new mortgage/purchase? Is this exclusion method better or basically same as converting your primary to rental AFTER new primary purchase? Which method will qualify for best loan?

@LoanWithJen Жыл бұрын

This is called boarder income, and generally very difficult to count as income on the purchase, unless you have a history of doing this

@Peterpan5243 2 жыл бұрын

Hi Jen, Thanks for the great video - quick question. I am looking to buy an fha duplex. Live on one side and rent the other. Lets say I can rent one side for 1800 a month, so x.75 = 1350 counted toward my mortgage offset. If i make $5000 a month from my job, and the mortgage is $2600, is only $1250 counted towards my debt? Or is $2600 counted towards my debt, but my income is considered $6350? Thanks

@LoanWithJen 2 жыл бұрын

Thanks for being specific! The 1350/Mo is added to your income. So your income for qualifying would be 5000+1350 = 6350. Take 6350 x 43%- and that is the approx. payment you can afford on a house (as long as your other debt not too high). Sounds like you will qualify fine (6350 x 43% = 2730/Mo PITI you can afford)

@sterl1616 2 жыл бұрын

Do you have a video for using income from house flipping to qualify for a mortgage?

@LoanWithJen 2 жыл бұрын

Hi Sterl 16. I do not! Great topic! I’ll add to my list, and thanks for suggesting. Flipping your house is considered capital gain. Capital gain income needs a 3 year history to count as income. In other words, we need to establish that you habitually flip houses and that is your source of income. 3 year returns are required. I hope this helps.

@daltonpouliot364 Жыл бұрын

question, I'm trying to get into the Airbnb market and one route that I think is going to work best for me would be using the rental income for that property to qualify for the investment property. However, I've read somewhere that if you go with this route that it can only be for a long-term rental rather than short term which I guess would be with the Airbnb scenario. So, my question is can I still use the potential rental income from the property to do this, and if not, what would be the best route for this type of market?

@LoanWithJen Жыл бұрын

Hi Dalton!!!! At the time of purchase, fannie mae guidelines let us use the potential long term rental amount (75% of it). Its checked and provided by appraiser at the time the house is appraised. I hope this helps you! If you end up renting short term thats ok.....and then in the future, we would look back at your tax return (2 yr history) and take that actual on your schedule E (for future rental offset on future purchases)

@1snakemanvrod 2 жыл бұрын

I have a question...I have 2 properties..(.I have a 3 year rental history with tax returns on 1 property .I just converted property 2 into a rental)...total cash flow is 1,300 per month...between the 2 homes.. mortage payment on 1 home is $1000 and rent is $1600 .. home number # 2 the mortgage payment is $1,000 and the rent is $1700.. can i use these to help qualify me for a new primary home purchase? My income from my job is $6,000 per month.. Is the total rent i collect also seen as income? What is my total income when i include my rental homes? Do the rentals help me qualify for more home?

@LoanWithJen 2 жыл бұрын

Hello! Rental income on #1 will be taken from your tax return net income , from schedule E. It’s a 2 year average. We can add back in for depreciation. On house #2 you might be able to take 75% of the rent, and use that, to offset the mortgage payment. Will depend if an FHA loan or conventional. They each have different guidelines. I hope this helps you!

@DramacydalEL Жыл бұрын

Does the rental have to be 2 full years? For example, a house was rented in November so I would only show 2 months of rental income. Then the following year show 12 months

@LoanWithJen Жыл бұрын

Hi Dramacydal, thanks for watching. The rental years will depend on if your new loan is conventional or fha. On FHA defintely 2 years. If your new loan is convetnional, the 2 mo should be ok with a lease, and also your 2022 tax return, showing the schedule E with rental income for 2 mo. Hope this helps!

@ISILENTNINJAI Жыл бұрын

If I have a current home that I pay 1300$ payment including taxes, insurance, hoa etc. And I want to buy a new primary residence, allowing me to rent my current come for say 2,000$ a month do I have to provide a lease or something for it to count as my income? I currently get 650$ every month from my brother who lives with me but he pays me cash or send me the money through zelle by chase bank. Second question is, the house I want to buy has 3 rooms I plan on renting. One to my brother and 2 others to tenants. I plan on charging each of them 700$ making that 2100$ a month from renting rooms at the new home. Can I use this projected income aswell ? Right now most lenders haven't approved me for more than a 300k loan since I have a 800$ payment on a truck but I've never missed a payment and even have a 60k downpayment for the new home. I make 60k annually if that matters. I'm just unsure if I'm not explaining my situation correctly to the lenders.

@LoanWithJen Жыл бұрын

HI Angel, thanks for the questions. 1. on rental income, you can only count rent on departing residence if your new loan is a conventional (FHA does NOT allow you to count rent income to offset departing residence). You will have to show a lease. And you can only count rent up to your 1300 cost (cant use extra) 2. This is called boarder income. It is usually only allowable for people with disabilities who have a live in nurse etc... but there is an exception on the Fannie Mae Home Ready program ( 3% down, first time buyer) and must be within certain income limits for your area- so not everyone qualifies). You must prove your shared residence with the boarders of a HISTORY in the past, like shared bills, utilities, addresses on their bank statements. It is very tricky and usually does not work. But possible. 3. On qualifying, it is a function of your debt to income ratio. If the 800 car payment is causing your debt ratio to be too high, the only solution is to lower your payment by refinancing, or trading in your car for a lesser one. Hope this helps

@Will-ds8kg 2 жыл бұрын

What about income from short term rentals with no lease? How can you use that income to qualify for a new primary residence on conventional loan? Do you have to wait until you have 2 years of that income on a tax return?

@LoanWithJen 2 жыл бұрын

We would need at least 1 year of tax returns.

@homoerotic85 2 жыл бұрын

Hello! I'm new to your channel, thanks for sharing. So my other half and I are wanting to buy a beach house (or maybe a cabin in the mountains) to rent out- like on Airbnb etc. Stay there a week or two on vacation and rent it out the rest of the time. So they can use 75% of market value rent to help qualify to buy the home- correct? If we decided to build a house instead of buying one already built would they be able to still use the 75% of rent or would it be different? We have around $40-60k to use to make it happen. It is from an inheritance and it's probably the only chunk of money we will have to better ourself, so we want to use it in a way that will bring more and more money with time. Keep on investing it into other properties to hopefully become wealthy, at least very comfortable. We have had the money for almost 2 years now trying to decide how to best use it to make the most out of it but it's time to put that money to good use. I feel like the longer we hold on to it the less it will be able to do for us. I would love to be able to talk to someone, even pay someone to help show us what we should do to make the most out of it. Like a game plan.

@LoanWithJen 2 жыл бұрын

Hello Eric! Welcome to the channel. When you are buying an investment property, min 20% down BTW, then yes, you can use 75% of the market rent to offset the payment. If you are buying as a 2nd home (vacation home) - 10% down min, you cannot use rent to offset. The other part of your question, about building, the answer is no, building is a different story altogether. You will need 20% down for sure, on the land, and then on the build. I hope this info helps you. I am not sure how much the prices are you are looking at . 40-50K can go quickly, sounds like you may have 10% down? If you tell me what state you are in either I can help you further, or refer you to a friend. I have lender friends in almost all states!

@homoerotic85 2 жыл бұрын

@@LoanWithJen Wow, thank you so much! I would love-love-love any help I can get, I really appreciate that. I live in Church Hill, TN. (North East TN right at the top about 15 minutes away from VA.). Ps. We do have about $20k more than said to invest in other things, but if we had to we could do that to provide 20% down.

@420blazinOG Жыл бұрын

What about scenario 3; You have no properties and want to buy a duplex/Tri-Plex with a owner occupied FHA loan, would you, the loan originator, still use 75% of the markets rental income as a qualifier for said loan?

@LoanWithJen Жыл бұрын

Yes, we would use 75% of the market rent (we verify the market rent is the same as what is currently being collected) for qualifying. Here is a video about it further. kzfaq.info/get/bejne/g8uae5yBrp_Km4E.html

@420blazinOG Жыл бұрын

@@LoanWithJen Thanks so much Jen!!

@GELATINOUSORBZ 9 ай бұрын

Hi,. I have a rental property that i short term rent. I have one year tax return on it. I am being told i cant use the rental income on to lower dti. I didnt show any profit to pay taxes on the return. Why isnt the rent that was paid which paid my expenses on it not being calculated towards my dti?

@LoanWithJen 9 ай бұрын

Hi , thx for watching. You need to have a 2 year history to count /offset the DTI. Also, we’ll only count the net on return from schedule E, we can add back in for depreciation, but if you 0 out ( it could offset your payment entirely because in your deductions, the mortgage interest taxes and insurance are included in there ) In summary, TWO years on return. and net used for any positive income

@tobiloby7556 6 ай бұрын

Hi Jen, thanks for the video, iv searched across youtube and the is the video with the best explanation so far. 3:24 still has me a little confused with the 75% of rental income for DTI. So let's say I have a day to day job that grosses $10k/m. I have a rental property (as used in your example) with rental income $1500/m and the mortgage is $1,000/m. Naturally id think my DTI would be $1,000/11,500 which is 0.08 or 8% DTI. But with the example you gave for conventional loan, 75% of $1500 is $1125. Qst 1: For conventional loan application for primary residence, with the 75% rule, what would my new total income be when calculating DTI? ($10,000 + $1125) Or ($10,000 + $375)? Qst 2. lets say i have 3 rental properties (using your example), $1500/m each rental income ($4500/m total) and $1000/m mortgage payment each ($3000/m total), and i file my taxes each year for the next two years. Come year 3 if i want to apply for a new conventional loan for primary residence, what would my new DTI if i kept my day to day job that grosses $10k/month as well? Thanks.

@LoanWithJen 6 ай бұрын

Hi! Thanks for the great detail! Qst 1- the new income is 10,000 + 1125 (75% of the 1500). and that is helping you offset the debt. The 1000 debt is included, lumped in with all other debts, and then offset by the 11,125 income as stated above. Qst 2 Once the rentals are o n the tax return, we use the net on Sch E, becuase you have other expenses and maybe repairs, or improvements, and we (hope ) you have rented out 365, but sometimes not. So the Sch E analysis REPLACES the formula for the 75% of rental income. Does that make sense. Its an either or formula review. I hope this helps you! Great questions! You have a good grasp of the concept. Happy to answer more. LMK

@yeetstreetbuilt Жыл бұрын

Can I use the income of rents of a building I want to rent as income to qualify?

@LoanWithJen Жыл бұрын

Thanks for the question! When you say building, is that a commercial building? in that case, it would need 2 year history. However, if you are buying a 2-4 unit property, and that is what you mean by building (residential NOT commercial) then you can use 75% of the rental income to offset the payments. I hope this helps! LMK if I can clarify further

@favored4life 2 жыл бұрын

Do you do DSCR loans?

@LoanWithJen 2 жыл бұрын

No we do not. for those that are reading this, a DSCR is and Investor Cash Flow loan uses the cash flow on a property to qualify for a home loan. Tax returns and employment information is not required. This product is also known as a “DSCR loan” (debt service coverage ratio).

@yume816 Жыл бұрын

Will the lender follow up to confirm rental income on your previous primary after closing a new primary?

@LoanWithJen Жыл бұрын

hello, not necessarily, however, at the time of closing, you will be required to provide a signed lease, and first months deposit. So that of course has to be legit.

@crismcdonough2804 Ай бұрын

@@LoanWithJenI was under the impression that you didn't need tenants right away? How can you rent a property that you don't technically own yet?

@daveandaya4626 2 жыл бұрын

Great video and information, why most of investors can get lots of properties in conventional loan with in a year even have no 2 years history for their properties ?

@LoanWithJen 2 жыл бұрын

Hi ! Thanks for the kudos. Conventional loans allow for up to 10 properties financed. It does get challenging if accumulate the properties at once, or in a short period. We can ONLY use the rental income on properties if the buyer has a 2 year history of collecting rent- and we see that on a tax return. FHA is for primary residences only. So only an option really on the first purchase, as your primary, and then later, after a year, the owner can move again, retaining that as a rental. Hope this helps! If not lmk.

@ahkeemcooper31 3 ай бұрын

What about va home loan

@LoanWithJen 3 ай бұрын

Yes, on a VA loan, if you are departing a house and renting out, you are able to us the monthly rental income (minus 25%) as income to offset your payment. You can only use this rental income amount up to total payment. No extra, or amount left over, can be considered

@davidpham9353 Жыл бұрын

Does VA loan buying a triplex Qualify for 75% rule?

@LoanWithJen Жыл бұрын

Hello David, on a triplex, the other 2 units (you have to live in 1 of them) the lender would take 75% of the rent to offset your payment for qualifying. Does that answer your question?

@The1SimLash Жыл бұрын

The average of 2 years of rental income? Is that with both Fannie and Freddie Mac?

@LoanWithJen Жыл бұрын

Hello Sim, yes it is. There are some exceptions, that when you are buying the property, as an investment, or renting your departing residence, we can take the potential income , that will be verified by an appraisers rental income analysis for the area, times 75% and use that as additional income to qualify. But if you have owned the property for some time, they will want to see it on 2 years tax returns.

@afshankhan3157 2 жыл бұрын

I have one case were subject is Conv Purchase of Investment, borr currently residing on rent and own one REO property since Apr 29, 2021. So can I use the rental income from existing REO? I knw from subject Invest I can only use rental income to offset the subject PITIA. Please advise

@LoanWithJen 2 жыл бұрын

Hi Afshan, to use the 2021 purchased property rent income, you have to have 2 years on a tax return. Correct, at the time of purchase, it’s a different story, you can use rental income to offset, and relying on avg rent schedule the appraiser does to be sure its market rent in the area not inflated.

@afshankhan3157 2 жыл бұрын

Thank you so much for the explanation :)

@LoanWithJen 2 жыл бұрын

@@afshankhan3157 You are welcome Afshan! Thanks for the kudos!

@baldwincobb 2 жыл бұрын

Do the rental payments offset your dti to qualify for a second fha?

@LoanWithJen 2 жыл бұрын

Hi Antonio, you cannot get a 2nd FHA loan (if you already have one). Only 1 FHA loan at a time. Is that what you meant? Let us say you are in a conventional loan now, and then go to a NEW FHA loan, you CANNOT use rent to offset. FHA will not allow rent income on a departing residence. If this does not answer, message me back!

@GELATINOUSORBZ 9 ай бұрын

2 questions to the lender. 1. What is the reason you are not using the 75% of my rental income toward my dti? 2.When can you use the 75% of my rental income toward my dti?

@LoanWithJen 9 ай бұрын

Hi thx for questions! On question 1- we CAN use 75% of market rent as long as the loan is 1. Conventional and 2. Signed lease/security deposit before closing. This also answers #2 Lmk if I can answer further!

@Entrepreneurusa Ай бұрын

I currently own a home where I live and I want to stay in it . But I want to buy an apartment or condo as a investment property to rent it out . Will that rent be considered in the debt to income ratio ?

@LoanWithJen Ай бұрын

Hello! It should be yes! Keep in mind for investment properties the minimum is 20% down. Here is a video about basics of buying investment. If you need help call me! My contact info in the description kzfaq.info/get/bejne/o72Zh6amya2WYYk.htmlsi=bW9S2dGSd6loFYw-

@joshengen4480 2 жыл бұрын

What about if after purchasing a property you want to buy another one in between filing your next tax return for the first purchase, in that case would you still be able to use the 75%?

@LoanWithJen 2 жыл бұрын

Josh, We can ONLY use the rental income on properties if the buyer has a 2 year history of collecting rent- and we see that on a tax return. that being said, when you buy a rental, at the purchase, you can use the 75% of rental income. But once that purchase is over, and you buy (another) property in the future… that prior property cannot be offset by rent (again) until you have the 2 year history. It’s a very strange wrinkle in the guidelines! lmk if I can clarify further!

@joshengen4480 2 жыл бұрын

@@LoanWithJen thanks so much!

@LoanWithJen 2 жыл бұрын

@@joshengen4480 You are welcome Josh!

@diose0078 Жыл бұрын

Hello Jen, I'm 63 years old and I'm planning (thinking) to buy a multi-family property (3-4 units) in Pennsylvania. My monthly social security is about $1,500 dollars a month. I have close to $30,000 for the down payment and closing expenses. My question is when can I apply for a mortgage? Do I have to find the property first with rented units? or can I apply now. The property will be my primary residence. Thank You in advance for your response.

@LoanWithJen Жыл бұрын

Hi Diose007! Thanks for the question. Your income would allow for monthly net expense of about 645/mo. Not sure the purchase price, but a good thing is that the rent on other properties can offset your new payment. I have a great contact in PA, you should call him . Tell him I referred you! lo.movement.com/stan-reinford/home

@diose0078 Жыл бұрын

@@LoanWithJen, thank you for your reply, I really appreciate it.

@LoanWithJen Жыл бұрын

@@diose0078 You are welcome Diose007!

@billygraham5589 2 жыл бұрын

Can I count the rental income on rooms I rent out of the house I propose to purchase? ANYONE KNOW? And WHAT IF you buy a duplex as your “residence?” Doesn’t 75% of the rent income from the unit you rent count as your income even if an FHA loan?!?!?

@LoanWithJen 2 жыл бұрын

Hi Billy! Thank you for your question! Unfortunately no, on a primary purchase you cannot count boarder income (that's what its called)😊

@billygraham5589 2 жыл бұрын

@@LoanWithJen But IF I buy a rental property which is not to be designated as my place of residence at the time of purchase, can I then count as income 75% of the total rent expected? (If the answer is “yes” I will have another related question.) But here’s a different question; is it harder y to to qualify for purchase of s as rental property?