Hello Sherita, Rental income is an acceptable form of income for the bank calculations. The trick is that the lenders would want to make sure that the basement apartment is legal. i.e. has retrofit status. This means that it would be registered with the city as a separate unit and have a fire certificate. If does not have this `retrofit status` then the rental of the apartment would be considered illegal as homes are generally registered as single family residence. So if its not legal the Lenders will not consider it. I hope this helps. You can get approved without the rental income, I would love to speak to you about this in more detail, I can give you more info and answer any questions you have. Pleases do not hesitate to contact me at any time. Abraham Niyazi - Mortgage Agent - Lic# M08010640 - Centum One Financial Lic# 10758 - Cell: 416-993-4082 - Office: 1-866-RATE-708 x 115 http://www.centum.ca/abraham_niyazi/ I have access to 25 lenders across Canada and 11 years experience in the industry.

Powered by

I just lease my previous principal residence in fl in april 2010. now im planning to purchase a 2nd home in cali. however, i have encountered a lot of issues regarding qualifying rental income towards 2nd mortgage due to the buy and bail scam. i do not have 30% equity on my first home. i purchase my 1st house for 165k and the balance is 130k, the value right now is at 128k. is there any way to qualify this because my purchase price for the 2nd home is very limited? i am planning to purchase a home at a price between 350k to 380 planning to put a down between 15-20%. i have good credit and my only debt is the house in fl.

You are going to need to wait a bit, you have to show the income on income tax returns. You might manage 1 years after you file in 2011 if your down payment is high enough. Rental income counts, but only after you can prove it and you can only prove it with your income tax returns. Normally you have to show 2 years though, Having negative equity will not matter one way or the other.

Powered by

I'm living a nightmare. i have an upside down mortgage on a house that i rent out and i'm renting an apartment. i moved for a job that i'm being laid off from this week. do i still qualify for unemployment even though i have rental income? tia

Yes you do. Renting a house is not a job.

Powered by

I own a four-plex with 30% equity and i'm trying to buy another. i don't have enough cash for a down payment but,i can take out a home equity line of credit for a down payment. i can't qualify without the rental income it produces and i was told that i need 30% equity in my property to use 75% of that positive cash flow as qualifying income towards a mortgage. what if i extracted the equity to use as a down payment and tried to claim 75% of the positive cash flow as income? can i only do one or could i pull off both?

No bank is going to give you an equity line for the full 30% "equity". They will appraise your building (which odds are will appraise much lower than you think) and the TOTAL amount of all building loans will not be able to be more than 80% of the appraisal. So, you will be lucky to get a loan for 10%. Then, as the bank has already told you if you have less than 30% equity, the new bank won't let you use the rental income to qualify for the new building . Sounds to me like you won't be able to do this without having cash in hand. Probably a blessing in disguise as commercial properties have not crashed-yet, but they are and will nationwide. Good luck

Powered by

When applying for a mortgage i noticed that certain income is not included (ie, interest income less than 1 year old, salary from a part time job less than a year old). my question is when does the income i get from renting out a property get to be included as part of my income when calculating my front and back end ratios? instantly, 2 years, & never? which is it? (side note: sure tenants could leave but based on the last two years job security at a 9-to-5 is a joke too.)

Generally speaking.....never. FHA, Freddie-Mac, and Fannie-Mae will not let you use rental income to qualify you for a new loan unless that is the business that you are in. A few years ago they would allow you to use up to 80% of the rental income but that all changed with the mortgage meltdown . Today you must show that you can afford to make both payments, on the old property and the old property, without using the income on the rental.

Powered by

I am going to lease out my primary residence so i can move overseas and teach english. my rental income will be less than my mortgage payment. i think the mortgage interest and real estate taxes alone will be more than my rental income. will this qualify as an investment loss?

Maybe you can deduct the loss, because it is not a passive loss. Are you actively managing your real estate? Read the IRS bulletin and see if their description matches you. Your interest is deductible. Your taxes are deductible. You can claim the interest, insurance on your rental schedule E, and claim your taxes on your personal deductions. Do not claim depreciation on your house, hopefully it will go up in value and you can claim the capital gains at the lower rate. You may not claim principal payments for your house.

Powered by

For instance - let's say you wanted to purchase an entire duplex, you live in one unit and rent the other. you expect to use this rental income to pay your entire mortgage, or maybe even only half. would this help you qualify for a loan that may be considered more than what you can afford? what if you were young and wanted to purchase a house and expected to take on room mates (and of course reporting the rent you charged your room mates as income).

Just the opposite. The lender requires a much larger down payment on rental income property and the interest rate is also going to be higher.

Powered by

Here's my situation: i am looking at a few 3 bedroom homes for purchase. i would be looking to go the fha route since i am a first time home buyer. i calculated out what the mortgage payment per month would be (including principal, interest, taxes, insurance, hoa, and pmi) with a 3% down payment, even though i would probably wind up doing higher than 3%. the payment per month came out to be around $2400. here's the thing, based on my income, that would not qualify me for a mortgage. i can afford $1200 per month, based on the 25% rule. my plan is to rent out the other 2 rooms to my 2 best friends for $600 a month each. my question is, if i have my 2 friends sign a lease ahead of time which says i would be receiving $1200 a month from them, and i take that to my mortgage broker, will that help me qualify for a loan? or will lenders only lend on mortgages in which you can afford the entire thing regardless of any potential rental income? is there a difference between fha loans and conventional loans in this regard? any help would be greatly appreciated. thanks. ok, so it's a no go with an fha loan according to the first answer below, what about with a conventional loan? credit score is good, so i guess there isn't any real reason to go with fha other than i've heard it lowers some premiums for first time buyers. also, can i still do a 3.5% down payment with a conventional loan?

Realestateguy is correct, they will not consider this income. Keep in mind that while your friends may like you and be trustworthy now, anything could happen over the course of a 30 year loan. Don't expect that they'll be happy paying 600.00 a month for 1 bedroom each when they could have an apartment of their own for nearly that much for very long. Find a home you can afford on your own, just in case.

Powered by

We got turn down for reasons that we received rental income...but we also pay mortgage on this rental property as expense and the house is also way underwater. also, when we told the social worker we pay mortgage for the rental property she change her reason..her reason for denying us now is that we make a little over in income but our income clearly shows a merely $800 for the one month. i am now confuse. anyone have a similar situation?

Food stamps are to help low income. They look at income before you add any deductions, just like everyone else. Just because you are spending your income does not mean you are not earning it in the first place. You also have assets to sell. Do not leech off me and the other hard working Americans just to improve your profit margin. It is especially despicable that you are wanting to take money inteneded to buy FOOD for people in need.

Powered by

My annual income including from my rental property comes up to be around $100,000 this year. -i contributed $7,000 to my 401k -other deductions (pre-tax...health care, fsa, etc) not including rental income my post-qualified deductions...my income will be $70,000 mortgage interest on my primary house is $2300/month or 27,000/year. mortgage interest for my rental property is $1000/month or 12/yeaa. how do i deduct mortgage interest from my earned income on the fax filings? how much of difference will write-offs "save" me? thanks. baburabu

You deduct mortgage on your primary home on schedule A. Your rental property mortgage is deducted from the income you made on the rental property on schedule E . There are too many variables (children, other income, other credits, other deductions) to tell you exactly how much the write-offs will save you. You can get a GENERAL idea by dividing your adjusted gross income (line 37 on 1040) by your total tax (line 63) this is your actual tax rate. Multiply that number by your write-offs and this is APPROXIMATELY what you will save.

Powered by

Under normal lending standards, what is taken into consideration for qualifying for a house that has an apartment that can be rented for additional income while the owner lives in the main house. i have done this before with a house i owned for 3 years, but it was when loans were easier to get in 2003. what are the credit scores, down payment %, etc. needed? how is the rental income calulated into the affordability?

The credit and down payment will be the same as another house. The rental income will be counted at about 75% and added to your gross pay.