Sometimes it just does seem as easy as it appears.
You are looking to buy an investment property or a rental, and you may even own a couple or so and want to refinance.
When income is calculated, remember, the rental income is adjusted to 75% of the actual rental revenue. You may ask, what about the other 25%, well that is set aside for potential vacancies and repairs. I should not say set aside, it just is not included.
So, if you have a property and charging monthly rents of $2500, the lender can use, 75% of that, or $1875 for qualifying for the loan, a pretty big difference. And you should also have two years of Schedule E tax forms showing this rental income.
Also, when looking at your tax returns, lenders will also, add back depreciation as an addition to your income. THis happens because depreciation is an accounting fiction and not an actual cash reduction.
Some ups and downs of qualifying for rental properties. Always good to have all your ducks in a row, and know where you stand when buying investment properties.
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