When it’s time to shop for a mortgage, every source of income counts. Even if you receive a relatively small income from rental real estate ventures, it could make a big difference in your ability to qualify for a loan.
Does this information resonate with you? If so, here is a piece of must-know info that could help you at the mortgage desk: In some cases, borrowers can qualify for a mortgage using their share of positive rental income. This statement is true even if they are not self-employed or listed on the mortgage note for those real estate business properties.
If that sounds confusing, don’t worry! It’s our job to demystify mortgages, and this situation is no exception. Here is a basic overview of what you need to know about this unique circumstance:
IRS Form 8825: Why It Matters
This situation applies to borrowers who complete IRS Form 8825. We know that there are seemingly countless tax-related forms, but this one reports income, losses and deductions related to rental real estate activities. It pertains to partnerships, estates and trusts.
Using Your Rental Income To Qualify for a Mortgage
Your rental income might play a heftier role in your ability to qualify for a mortgage than you think. Here’s how it works:
- In mortgage land, self-employed is defined as owning 25% or more of the rental real estate business. If you own less than that, your rental income still counts.
- If you’re not listed on the mortgage note(s) for the rental real estate properties, it doesn’t mean that your income is insignificant. That’s where we step in to help analyze your specific situation.
- Form 8825 also reports losses, so if you have experienced a loss, this will likely count against you at mortgage time.
Contact MortgageDepot Today!
If you are involved in rental real estate activities and want to use this income to qualify for a mortgage, stop by our office! We’ll analyze your situation and guide you toward the best mortgage product for your needs.
Contact one of our loan consultants to learn more.
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