Hey guys, itâ€™s not that simple, if you have a history of property management that helps, if you have never owned rental property the lender is required to make sure the deal will work for you. For example, if you do not have a tenant already lined up and a lease signed the lender is not allowed to count rent that doesnâ€™t exist. Depending on the LTV the lender may require as much as 6 months of liquid reserves in addition to rent loss insurance. The guidelines actually protect you more than they do the lender. They increase the probability you will succeed. Here are a couple of lines from my underwriting manual that give an indication how specific the rules are, these are only a fraction of what we must cover, but I only included the parts that sound like your situation. Good luck, hope this is helpful.
Positive net rental income may be entered in Gross Monthly Income. Aggregate net rental loss must be included as a liability.
If the tenant is a family member, a copy of the fully executed lease and evidence of receipt of the rental income for 12 months, or period of the lease if less than 12 months, is required. On a brand new lease, the evidence of the receipt of the initial deposit is required. If documentation cannot be provided, no rental income may be considered.
If the borrower requires rental income from the present home to qualify, refer to the conversion to investment guidelines.
When the rental income relates to the subject property, an appraiser's opinion of market rent and, if applicable, copies of the current lease agreement(s) are required. The lesser of the appraiser's opinion of market rent or the lease agreements must be used. The gross rental income from the property will be equal to the lesser of the market rent established by the appraiser or the current rent based on the existing lease agreement (s). Net rental income will equal 75% of the gross rent; the remaining 25% of the gross rent is absorbed by vacancy losses and ongoing maintenance expenses. When the borrower has a history of receiving rental income for the subject property, the rental cash flow should be analyzed.