Financing in Wallkill>Question Details

Donald Beach, Home Buyer in 12533

My brother and I currently rent together and are looking to buy a home. My name is on the lease, but we have

Asked by Donald Beach, 12533 Mon Jul 27, 2009

always split the rent (or he pays me rent, depending on how you would think of this). Now that we want to buy a home, is there a way for he and I to sign a lease so that his rent can contribute to my income for purposes of financing? He will still be living with me for many years to come, paying half the mortgage. This is only a 1-family home, of course.

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Bob McClure’s answer
hi again....i don't dipute matthew's answer to your almost 15 years in the business, i have yet to see a brother or any family member claim a sibling's rent as income on a tax return, however, you could be the first....if you do claim it...then i suggest following matthew's advise, and apply using your brother's of luck to you..bob mcclure- success mortgage partners- plymouth, michigan........
0 votes Thank Flag Link Tue Jul 28, 2009
Good morning again! In response to Bob's comment: he is wrong! Here is HUD's guidelines:
"Income from roommates in a single-family property to be occupied as the borrower's primary residence is not acceptable. Rental income from boarders is acceptable if the boarders are related by blood, marriage, or law. The rental income may be considered effective income if shown on the borrower's tax returns. Otherwise, the income only may be considered a compensating factor and must be documented adequately by the lender."

Because he is your brother...he is allowed provided you meet the guidelines. You must have a lease, you must show the rental income on your taxes, and must be able to prove that he has made timely payments to you.

I hope this clears everything up and wish you the best of luck!

Matthew Tetloff
0 votes Thank Flag Link Tue Jul 28, 2009
good will not be able to use your brother's contribution to the deal regardless of how he has paid (pays) you, unless he goes on the mortgage with you......if he is going to be living with you indefinitely, then put him on the deal.......if there is a credit issue with the brother, then you would need to qualify on your own, or perhaps with a non-occupant co-borrwer such as a parent, regards..bob mcclure- success mortgage partners- plymouth, michigan........
0 votes Thank Flag Link Tue Jul 28, 2009
Hi Donald. To answer your question, it will largely depend on what type of loan that you do. If you have a 2 year rent history or more and you pay the rent using a check or money order to the landlord, you will have a papertrail for proof of rent. If your brother pays you cash for his half, you will not have the proof that an underwriter/bank will feel comfortable with. Also the bank/underwriter is going to ask for your full tax returns to see if you told uncle sam that you were collecting rent.
However, if your brother pays you by check or money order and you have been sharing the rent long term than the bank may consider his rent towards your monthly income. The most important factor is weather you can afford the monthly payment without your brother's income. If you can't, I would suggest that either you find a home with a lower payment or you add your brother to the loan so you may use both of your incomes. Because you are buying a single family home, relying on your brother's money to make your payment is considered risky to a bank because your brother could move out at any time and leave you with the full payment. And if you need your brother's money to make the monthly payment, you may be over extending your self. I would suggest that you talk to your family members and find a loan officer that your family has used and trusts, then sit down with that person and go over your situation so you will know what your getting in to. Remember that if the payment seems too steep for you, it usually is!
0 votes Thank Flag Link Tue Jul 28, 2009
Hi Donald,
My suggestion to you would be to approach a mortgage representative in the area. As a Buyer's Representative I always ask that my potential homebuyers become prequalified to know how much home they can afford. If your brother's credit merits it perhaps you can buy the house as partners with both names on the deed and mortgage. I always urge my buyer clients to check with their own bank or credit union first. I can provide you with the names of some local mortgage lenders that may be able to help if you would like. Feel free to contact me with any other questions.

You can find a lot of Hudson Valley New York local and homebuyer information in my blog. Hope you find it helpful
0 votes Thank Flag Link Tue Jul 28, 2009
Not unless its a multi unit property or he would have to be on the loan with you to use his income (and debt).

But you cannot count rental income on a one unit single family home or condo.
0 votes Thank Flag Link Mon Jul 27, 2009
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