How to Use Rental Income to Qualify for a Mortgage
- 1). Claim all income and expense from the rental property on your tax return. The mortgage company will likely request copies of the past two years of your personal tax return and will expect to see the leased property listed on a Schedule E if it has been leased during prior tax years.
- 2). Make a copy of the existing lease for the property. You must have a lease to prove that another person is legally liable to remit the amount of the monthly rental payment you are claiming on your current loan documents.
- 3). Maintain a list of expenses associated with leasing the property for the current tax year. The mortgage company will want to know the amount of expense associated with the lease to properly reduce rental income by that amount. This is particularly important if the property was recently converted to rental property and has never been reported on your personal tax return.
- 4). Deposit the entire amount of rent received each month into a bank account in your name. The mortgage company will want to verify that the amount listed on the lease is the amount received for rental. The mortgage company may request up to a year of statements to ensure that you are not committing fraud by claiming lease income.
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