Can expected rental receipts be considered income when applying for rental property mortgage?
Wednesday, July 29th, 2009 at
12:07 am
If someone wants to buy a rental property, can they improve their mortgage application by including part or all of the expected monthly rent to be received once the property is rented to a tenant?
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Tagged with: Mortgage Application • Property Mortgage • Receipts • Rental Property
Filed under: mortgage
yes. When I bought a 2 family house the expected rent was included as income allowing me to borrow more.
My lender wanted to see all income documented. I had to show them previous years taxes proving I was receiving money form my properties. Things are tight I don’t know if they will consider expected income.
The bank will count something like 60-75% of the rental income as income for purposes of determining loan eligibility. Be careful here – if you really need the income to afford the house, then you probably can’t afford it. You will likely need to carry those costs yourself on average of 1 to 2 months a year.
Unless it is owner occupied rental (a duplex or something like one) then you will need a much higher downpayment and your insurance rates will be significantly higher.
good luck!