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.
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:
- Leverage - putting as little money down as possible for opportunity cost purposes.
- 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?"
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