Nine-to-five jobs are no longer the only source of income that our clients bring to the mortgage desk. They might not even be the most common!
To build wealth, some of our clients have explored the world of real estate investment. Owning property rentals can be a money-making move, but it can also present challenges when it’s time to shop for a mortgage.
At MortgageDepot, we love a challenge! Our experienced loan officers recognize that every client’s financial situation is different, and we have solutions to address the unique circumstances that come along with being a rental property owner.
A client recently asked us this question, and our answer surprised them:
Can I use rental income to qualify for a mortgage even if that income only appears partially or not at all on my previous year’s tax returns?
We said yes! You can use rental income that isn’t present on last year’s tax returns to qualify for a mortgage in certain situations.
How Does This Work?
There are two primary situations where you can use rental income that didn’t appear on last year’s tax returns to qualify for a mortgage. Here they are:
- If the property needed significant updates or extensive repairs that prevented occupancy and rent collection, you might be able to use that missed income to qualify for a mortgage.
- If you didn’t acquire tenants to occupy the property for a portion of the previous year, you might still be able to use that missed rental income to qualify for a mortgage.
In both situations, you must provide an executed lease to use rental income that isn’t listed on last year’s tax documents.
What You’ll Need
In addition to an executed lease, you’ll also need the following documentation to make this situation work:
- A copy of the Closing Disclosure (CD)
- A copy of the Fair Rental Days form on Schedule E
- Property repairs listed on Schedule E
- Contractor invoices
- A Letter of Explanation (LOE) that details the situation to the loan underwriter
Contact Us Today!
When shopping for a mortgage, don’t assume that your financial situation disqualifies you from the best rates and terms! Connect with us today and let us lead you down the path to your real estate goals.
Contact one of our loan consultants to learn more.