FNMA Rental Income Worksheet-Principal residence

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  Rental Income Worksheet
  Principal Residence, 2- to 4-unit Property:  Monthly Qualifying Rental Income
  Documentation Required:   Address of Principal Residence:
  §  Schedule E (IRS Form 1040) OR    
  §  Lease Agreement or Fannie Mae Form 1007 or Form 1025 Enter Rental Unit Rental Unit Rental Unit
             
  Step 1.  When using Schedule E, determine the number of months the property was in service by dividing the Fair Rental Days by 30.
  If Fair Rental Days are not reported, the property is considered to be in service for 12 months unless there is evidence of a shorter term of service.
  Step 1.  Result:  The number of months the property was in service: Result      
  Step 2.  Calculate monthly qualifying rental income using Step 2A:  Schedule E OR Step 2B:  Lease Agreement or Fannie Mae Form  1025.
  Step 2 A.   Schedule E – Part I            For each property complete ONLY 2A or 2B
  A1 Enter total rents received (from the non-owner-occupied units). May enter rent from individual unit(s) or combine. Enter      
  A2 Subtract total expenses. Subtract      
  A3 Add back insurance expense. Add      
  A4 Add back mortgage interest paid. Add      
  A5 Add back tax expense. Add      
  A6 Add back homeowners’ association dues.  This expense must be specifically identified on Schedule E in order to add it back. Add      
  A7 Add back depreciation expense or depletion. Add      
  A8 Add back any one-time extraordinary expense (e.g., casualty loss). There must be evidence of the nature of the one-time extraordinary expense. Add      
    Equals adjusted rental income. Total 0 0 0
  A9 Divide by the number of months the property was in service (Step 1 Result). Divide 0 0 0
  Step 2A.  Result:  Monthly qualifying rental income (or loss): Result 0 0 0
  Step 2B.  Lease Agreement OR Fannie Mae Form 1025      For each property complete ONLY 2A or 2B
  This method is used when the transaction is a purchase, the property was acquired subsequent to the most recent tax filing.
  B1 Enter the gross monthly rent (from the lease agreement) or market rent (from Form 1025) for the applicable rental unit Enter      
 
 
  B2 Multiply gross monthly rent or market rent by 75% (.75).  The remaining 25% accounts for vacancy loss, maintenance, and management expenses. Multiply x.75 x.75 x.75
    Equals monthly rental income per unit Total 0 0 0
  B3 Combine the monthly rental income of all non-owner-occupied rental units (up to a maximum of 3 rental units since rental income is not eligible for the unit occupied by the borrower). Add 0
  Step 2B.  Result:  Monthly qualifying rental income: Result 0
  Step 3.   Determine the qualifying impact using the combined result of Step 2A or Step 2B.
  3A Add the monthly qualifying rental income to the borrower’s monthly qualifying income. 0
  3B Identify the full amount of the PITIA as the borrower’s primary housing expense and
include it in the debt-to-income ratio.
Use proposed PITIA when the subject property; existing PITIA when not the subject property.
 
  DU Data Entry Monthly Income and Combined Housing Expenses Mortgage Liabilities
  Subject Property Enter the amount of the monthly qualifying income “Subject Net Cash.” Include as the borrower’s primary housing expense.  For refinance transactions, identify the mortgage as a subject property lien.
  Non-Subject Property Enter the amount of the monthly qualifying income “Net Rental.” Include as the borrower’s primary housing expense.
  Refer to the Rental Income topic in the Selling Guide for additional guidance.        

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September 6, 2017

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