Can I Use Rental Income To Qualify For A Loan? (Hint: It Depends)

Mortgage and Lending with CMG Mortgage, San Diego, CA NMLS 259027

Can I use rental income to qualify for a loan?  Seems like a clear and concise question, but the answer will vary depending on the overall characteristics present.  Below is a grid referencing Fannie Mae & Freddie Mac "Conforming" (aka "Conventional") underwriting guidelines.  As you can see, Lenders need to know a bit more information before answering the "can I use rental income to qualify for a loan" question.

Rental Income To Qualify For A Mortgage -

With the above information in mind, please be mindful that underwriting guidelines are always subject to change, and that these particular guidelines reflect only a portion of the available mortgage loan programs on any given day.

Typically, these Fannie Mae & Freddie Mac "Conforming" (aka "Conventional") mortgage loans have the most attractive pricing options and most lenient approval guidelines.  These characteristics are useful in helping property investors achieve the 2 most common goals of investment property purchases, which are:

  1. Leverage - putting as little money down as possible for opportunity cost purposes.
  2. Cash-Flow - lower rates increase the probability that the subject property will "pencil out" (meaning the rental income will meet/exceed the monthly payment expenses)

For a customized review of your mortgage options (whether the intended subject property will be your Primary Residence (Owner Occupied), a Second Home, or a Rental Property (Non-Owner Occupied), please feel free to contact me.

If you are a Real Estate Agent, it is my hope that the above grid will help you properly answer the common question of "can I use rental income to qualify for a loan?"

George Souto
George Souto NMLS #65149 - Middletown, CT
Your Connecticut Mortgage Expert

Jason E. Gordon I like your response to your question. "It Depends".  Especially with an investment property, it could end up being a loss to income.

Dec 21, 2022 02:36 PM
Michael Jacobs
Pasadena, CA
Pasadena And Southern California 818.516.4393

Hello Jason - so many situations in real estate, mortgage lending and in everyday life can be summed up with "it depends".  There are guidelines, of course.  However, it's in the details, where other factors come into play.  And that can make a difference.  A big difference.  

Dec 22, 2022 03:00 AM
Jan Green - Scottsdale, AZ
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Good to know!  Things have changed since I rented out my home in 2015 and bought another one.  I only needed a security deposit in the bank and a signed lease. Tricky timing but it worked.  I'm sure that much has changed and this may vary if using a bnak vs a broker? 

Dec 23, 2022 09:05 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Thanks for the education and clarification on the use of rental income, Jason. This was an issue with a couple of clients in the past.

Happy Holidays!


Dec 23, 2022 09:41 AM
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

Good to know this for future investment clients!

Dec 31, 2022 04:53 PM