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looking for lender who can get income from current renter in duplex to be counted.

Is this possible?  Zillow's mortgage request doesn't allow  me to input these kind of details.

Wanted:  mortgage amount $460,000
20% down on a duplex to be owner occupied. 
My income doesn't qualify for that size loan but can I count the $1400/month from renter of other unit?
  • October 12 2009 - Berkeley
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Answers (6)

Joseph,

You may want to get a little more familiar with your "Wells Fargo" Underwriting guidelines on the purchase of 2-4 Unit properties.

They will use the "Monthly Operating Income" to qualify the borrower.  They will require rent loss insurance covering 6 months rent.  They do not require a 2 year history of rental income.  VA does but not a conventional loan with 20% down.

P.S. Welcome to the threads..make sure you give accurate advice and if you are unsure...don't provide the info.  You will get called out almost every time!

  • October 16 2009
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Hello pubpol,

There are certain requirements that are needed in order to use the rental income for qualifying.

1.    The underwriter is going to want to see that you have at least 2 years of property management experience. They will determine this by looking at your last two years tax returns under schedule E. If you don't have any prior experience, you will not be able to qualify with the rental income.

2.    If you do qualify, they will request a rent comparable schedule and you will only be able to use 75% of the rental income.

You may want to consider other alternatives such as a co-buyer. I hope this helps!


  • October 16 2009
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A few things in addition to the comments below that are correct so I won't be redundant.  When the appraisal is performed the lender will need to request a rent schedule with the normal appraisal and expect that to cost you around $100 more.  Also, I would expect an underwriter to request the lease agreement and history for the existing tenant.  We did not used to need these things but the lenders are not going out on a limb for any loan.  You need to convince them that it is a viable rental, has history and a likelyhood that it will continue. 
  • October 12 2009
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75% of the rent that is under contract will count for income, let the unbderwriter give you the rules laid out. I suggest apply for aFHA loan as owner occupied 2 family, make a smaller downpayment and keep plenty of reserves (savings) for repairs, rent loss and general maintenance.

  • October 12 2009
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That's a good point, and I appreciate you mentioning it.  However, without getting into details, the situation is such that I'm very confident in my ability to make payments even with an extended vacancy. 
  • October 12 2009
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Why would you buy a property that you cannot afford on your own? What happens when your renter leaves? 

Even if someone "could" do this, why would you want to?
  • October 12 2009
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