On a conventional loan, boarder income is not permitted unless you meet the exception below. FHA, in some cases, allows boarder income though. It has to be documented on her tax return though, and the boarders need to be related by blood, marriage, or law. If those circustances don't apply either, it can't be used to bolster income.
When approving a mortgage, lenders look not only at the mortgage payment as a percentage of income, but also her other debts combined with the mortgage, such as car payments, credit cards, and student loans.
48% is super high for just the house. That''s about the limit for ALL debts (sometimes you can go up to 50%).
If she can get a relative with good income and credit to co-sign on the loan with her then FHA might be an option. Other than that I don't see any good solutions unless she wants to sell the home.
You are right to not sign a quit claim. If you are on the mortgage currently then why should you give up any interest in the home when you are still liable on the mortgage?
Hope this helps!
Income from boarders in the borrowerâ€™s principal residence or second home is not considered
acceptable stable income with the exception of the following:
â€¢ When a borrower with disabilities receives rental income from a live-in personal assistant,
whether or not that individual is a relative of the borrower, the rental payments can be
considered as acceptable stable income in an amount up to 30% of the total gross income that
is used to qualify the borrower for the mortgage loan. Personal assistants typically are paid by
Medicaid Waiver funds and include room and board, from which rental payments are made to
This means two full years of leases, and books showing income and expenses.
This may present a challenge I don't know.
Another option would be to speak with a local credit union who because they hold their loans in-house and don't sell them on the secondary market do not have to deal with the same secondary market requirements that traditional lenders have to work with and can be considerably more flexible.
If your relationship is still relatively amicable it may make sense for you both to sit down with a lender and or financial adviser and attorney and work to put together something that works for everyone involved.