subject: Home Affordable Guidelines for Rental Income [print this page] Home Affordable Guidelines for Rental Income
If you own a rental property below is information you will want to know before you apply for your loan modification. This is for homeowners who are trying to modify their primary home, but may have other property they own.
If you are trying to modify your investment home, it will not qualify under the government's Home Affordable, because under that program it needs to be your primary home. Lenders do verify if you occupy the home as your primary!
Rental Income
You will have to document you are receiving rental income and how much and what deductions you may be taking. Usually if you are a investor in real estate you would already know you will have to provide your tax returns including the IRS schedule E (supplemental income and loss) for the most recent tax year.
However, what if you just rented the property and have not claimed any rental income or expenses for the tax year? The lenders will take the current lease, your bank statements to show deposits of rental income, or cancelled checks.
Remember the lenders only take 75% of gross rental income as income and use the other 25% as vacancy loss and or maintenance expenses. So if you are collect $1200.00 in monthly gross rent you can only use 75% of that income $900.00.
What if my mortgage on my rental is more than what I can claim as income? If your mortgage payment is 1250.00 and you collect 1200.00 but the lender only uses $900.00 of that 1200.00 you collect, you will show $350.00 negative. In most cases the under writer who is qualifying you for the program may consider the payments to wash themselves out, or they may take your total income and minus out the $350.00 plus any other expenses that could be tied to the property.
Lenders will verify that the rental house is indeed rented and may send out a property inspector.
*Investment homes do not qualify under the HAMP program but you can contact your loan servicer and ask if they have loan modifications for investment homes.
