Home Buying in Sacramento>Question Details

Jennifer Got…, Home Buyer in Rocklin, CA

If I plan to rent out two rooms in the home can I use the potential rent income toward my income to qualify?

Asked by Jennifer Gottfried, Rocklin, CA Thu Apr 3, 2014

When you buy a duplex, you can use the potential rental income to qualify for the purchase. Can I do the same if I plan to rent out two bedrooms in the home? If not, how can I qualify for buying this larger home?

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RonS’s answer
some lenders will allow "Boarder" income however, you would have to claim that income on your taxes and would have to have a two year history of the income and, would only get 75% credit towards the income...if they let you use the income. (Each lender may have different overlays beyond the fannie/freddie guidelines so, you'll hear variances. one year here, two years there, etc..)

So, if you aren't currently renting to anyone, and for two years and claiming the income on your taxes, no. They won't let you use it.

Your example of what it is you can do with a duplex isn't the same as what it is you state you are planning to do so, it's not really an apples to apples comparison.
0 votes Thank Flag Link Tue Apr 8, 2014
Lenders will not allow use of potential rental income from a owner occupied single family home. However, depending upon how much down payment you are making and what your current rent is or if you live with family, rent free, you may still be able to buy this house as an investment and use the market rent from it to get additional income to qualify.
Speak to a local licensed mortgage professional about this.
Good Luck!
0 votes Thank Flag Link Sat Apr 5, 2014
No. Room rent does not count as rental income. Just send me an email if you have any further questions.

Alex Greer
Loan Officer
NMLS #1056079

0 votes Thank Flag Link Fri Apr 4, 2014
I suspect the more important questions are a) why do you need to buy a larger home, using your words, not mine, to describe your purchase and b) how do you know you don't qualify to buy that kind of home to start with and c) have you lived with roommates and, if so, d) how well has that worked out for you? Sometimes we forget about the horror stories. :)

It might be wise to consider -- if it comes down to the only way you can feel financially comfortable buying a home is to rent out a room or two -- that maybe it's not time to buy a home. It's hard enough to get used to home ownership, maintenance issues and all that comes with owning a home, for a person who is financially stable and can easily afford it. It's much harder issue if it's a struggle.

Your best bet is to talk directly to a mortgage broker. You can call Dan Tharp from Comstock Mortgage at 916.257.1470, because he's the guy I would call for a mortgage. Maybe you can qualify without roommates because the underwriter won't use that potential income.
0 votes Thank Flag Link Fri Apr 4, 2014
I would be glad to have one of my lending contacts go over all your options. There have been some changes in avaliable loans.
0 votes Thank Flag Link Fri Apr 4, 2014
Probably not. First of all, it would need to be a multi-family home as I understand the rules. Renting out rooms to roommates in your single family home is allowed, but it will not count toward income. Second of all, in most cases a two year history of rental income is required before it counts toward your income in order to qualify for a mortgage. 358
0 votes Thank Flag Link Fri Apr 4, 2014
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