Straight from VA Pamphlet 26-7 Ch. 4 at http://www.benefits.va.gov/warms/pam26_7.asp
Verification: Multi-Unit Property Securing the VA Loan
Â· cash reserves totaling at least 6 months mortgage payments (principal, interest, taxes, and insurance - PITI), and
Â· documentation of the applicantâ€™s prior experience managing rental units or other background involving both property maintenance and rental.
What that means is if someone wants to use the rental income for qualifying income, then they'll need a 2 year history of being a landlord or property manager as well as 6 months cash reserves of the proposed PITI payment. The 2 year prior experience doesn't need to be on the subject property, it could be for a different rental property the homeowner owns or a prior one that they have owned, but either way verification is needed (i.e. tax returns showing rental income on Schedule E).
Even if the rental income in question cannot be used to qualify, debt ratios of ~50% are able to qualify for VA mortgages. VA is more concerned with residual income requirements and does not have a maximum debt ratio, but a lot of lenders have overlay guidelines not to permit more than a maximum debt ratio (50%, 55% & 60% are common maximums).
Shane Milne | Lending in all 50 states | NMLS #81195
Thanks for your question.
This should be answered by a loan officer. You could contact William De La Torre at Wells Fargo. 856-562-2286 or email@example.com or any other you like.
My understanding is that he may have to be seasoned a Landlord (1 year experience receiving rent) or have 6 months rent in the bank but check it with a mortgage representative better.
Good luck with your client.
Ines De La Cruz
Let us know.
Let us know how you make out with that so we all gain some helpful knowledge!