Home Buying in Chicago>Question Details

Sabran, Both Buyer and Seller in 60630

Rules regarding counting rental income?

Asked by Sabran, 60630 Sat Feb 9, 2013

I asked a similar question earlier today, but I'm hoping to get a bit more clarity. I'm currently living in a condo, and I'd like to move. I'm likely going to need to rent my condo instead of sell it as its quite a bit underwater. As far as qualifying for a second mortgage is concerned, when will lenders allow me to count my rental income? Is it at soon as I get a lease with a security deposit? Is it after 6 months of income? 2 years? Does it change from lender to lender?

Help the community by answering this question:


Bill J Deligiannis’ answer
You need to report the income on hyour taxes and qualify for 2 mortgages. Get prequalified so you know exactly what you can do.

Also, maybe you can refinance your current condo before you move.
Web Reference: http://www.bjdloans.com
0 votes Thank Flag Link Sun Feb 10, 2013
Dear Sabran,

The qualification for rental income being used as income to qualify for a loan does not change from lender to lender. The rules for what is considered "income" to qualify for a loan has been pretty much set in stone after the mortgage break down and rightfully so. Until your rental income appears on your taxes you cannot declare it as income.

Sabran, please check with you Home Owners Association in regards to owner being allowed to rent. They may have set rules.

Best of Luck,

Manuel Brown, Broker
iMove Chicago
0 votes Thank Flag Link Sat Feb 9, 2013
Speak with your lender, but if you have enough down for payment, you can use the "rental income" off of the lease to qualify for the next loan. With not enough down, they need to see it on the tax returns.
0 votes Thank Flag Link Sat Feb 9, 2013
Talk to your loan officer. We have no idea what loan program you are using to purchase.
0 votes Thank Flag Link Sat Feb 9, 2013
If you do not have at least 25% equity in your current property then you can't use the income to qualify until you show the rental income on your most recently filed tax returns.
(25% equity for FHA 30% for conventional)
Sam Sharp
Senior VP of Mortgage Lending
Guaranteed Rate
773 290-0455
0 votes Thank Flag Link Sat Feb 9, 2013

I would suggest you speak with a qualified lender for the second mortgage questions. As far as I know, there are no lenders willing to lend additional money on an underwater home. I hope you find the right answer and good luck!
0 votes Thank Flag Link Sat Feb 9, 2013
From my experience in the Chicago area, the lenders have required a buyer to have 2 years of "being a landlord" before they will count rental income.
0 votes Thank Flag Link Sat Feb 9, 2013
This can vary based on lenders. My web site has some references. Give them, and others, a call.
0 votes Thank Flag Link Sat Feb 9, 2013
Your last question is key. The rules regarding rental income changes from lender to lender. You can find some local banks that will consider rental income as soon as the lease is signed. Or, most national lenders have strict guidelines for a minimum of 6 months.
Web Reference: http://www.archershomes.com
0 votes Thank Flag Link Sat Feb 9, 2013
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