Did you know you can use boarder income to help you qualify for certain loan programs? Understanding which programs allow you to utilize boarder income and the requirements for each can help you get ahead when applying for a loan.
Boarder income is income that a person receives for lodging, meals, or related services from people living on their property. There are three types of loans that you can apply boarder income to:
- Federal Housing Association (FHA)
- Fannie Mae (FNMA)
- Freddie Mac (FHLMC)
Federal Housing Association (FHA)
- Mortgagee must obtain a copy of the executed written agreement documenting intent to continue boarding with the Borrower for purchase transactions.
- Borrower has a two-year tax return history of receiving income from boarders and the borrower is currently receiving boarder income.
- Obtain two years of the Borrower’s tax returns evidencing income from boarders and the current lease.
Fannie Mae (FNMA)
Boarder income from boarders in the borrower’s principal residence or second home is only acceptable when:
- Documentation of the boarder’s history of shared residency that shows the boarder’s address as being the same as the borrower’s address.
- Documentation of the boarder’s rental payments for the most recent 12 months.
- When a borrower with disabilities receives rental income from a live-in personal assistant, the rental payments can be considered as acceptable stable income in an amount up to 30% of the total gross income that is used to qualify the borrower for the mortgage loan.
Rental income from the subject 1-unit primary residence rental income generated from a borrower’s primary residence may be used to qualify with a disability if the rental income is from a live-in aide. This Income source may be considered stable monthly income if:
- The rental income may be considered in an amount up to 30% of the total gross income that is used to qualify the borrower.
- The live-in aide plans to continue to reside with the borrower for the foreseeable future.
- Borrower received rental payments from a live-in aide for the past 12 months on a regular basis.
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