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Financing in 08108 : Real Estate Advice

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Activity 2
Mon Sep 17, 2012
Shane Milne answered:
VA has slightly different guidelines for using rental income to qualify vs. FHA or conventional.

Straight from VA Pamphlet 26-7 Ch. 4 at

Verification: Multi-Unit Property Securing the VA Loan
· cash reserves totaling at least 6 months mortgage payments (principal, interest, taxes, and insurance - PITI), and
· documentation of the applicant’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
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Sat Oct 24, 2009
Laura Giannotta answered:
Check this link which contains a list of things that must be inspected for FHA mortgage can click on the links and find what the appraiser will look for.

Good luck!

Laura Giannotta
Keller Williams Realty - Atlantic Shore
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