Mortgage pre-approval question.

Asked by Jamie, 27606 Tue Feb 2, 2010

I'm thinking to get a pre-approval for a mortgage. If I have a income from rental property, does lender count it 100% of the amount? or less? Also do they calculate the rental income before deducting the asset depreciation or after?

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3
Reginold Jon…, Agent, Cary, NC
Tue Feb 2, 2010
It generally does not counted 100% In fact, if you are going to count that income, you will probably need to provide tax returns and they will look at the AGI when calculating debt to income. I just had a discussion with the lender that I partner with when working with other clients and we were discussing changes when it comes to using tax returns for self employed and schedule C clients interested in purchasing a home (I know, ironically having a conversation with a lender about this very subject sound a little fishy but its actually true!!! LOL) In fact, with all the changes in the mortgage industry involving RESPA and other guidelines, it may be beneficial to have a conversation with a lender just for information purposes. Feel free to contact me if you would like a referral to knowledgeable lender!!

Good luck
1 vote
Ute Ferdig -…, Agent, New Castle, DE
Tue Feb 2, 2010
Hello Jamie. They only count 75% of the rental income and only if you have at least 30% equity in your rental. If you don't have the necessary equity, they don't count the rental income at all. I think FHA may only require 25% equity, but I am not 100% sure about that. I don't think they look at depreciation factors when determining the rental income.
1 vote
St. Peter, Agent, Raleigh, NC
Wed Feb 3, 2010
Hi Jamie, because everyone's situation is different, I would suggest talking with a lender. There's just too many changes going on in the banking industry right now. If you would like it would be a pleasure to refer to someone I like a lot!

All the best and happy house hunting!
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