Do lenders consider income from room rental inside your primary residence?

**Theorist** · 04-28-2012, 02:31 AM

I rent two rooms out of my house and I report the income on my taxes with a Schedule E. Have been doing that for several years.

I'm looking to sell my house, buy something bigger, and rent the spare rooms there too. If they consider the money I make on my rooms now, I'll qualify for a much better loan.

Will it be a problem finding lenders who will do this?

**Greg** · 04-29-2012, 04:36 AM

To consider rental income lenders look at the property generating the income. If the house you are buying does not already generate income then they might not consider the income in the calculations. They want a history from the property.

Plus, if they use the rental income to qualify you for a larger loan you will move up to investor loan status which requires a larger down payment and has a higher interest rate.

Talk to some local lenders to get the details.

**Theorist** · 04-29-2012, 02:05 PM

Thank you for the info.

Originally Posted by Greg

To consider rental income lenders look at the property generating the income. If the house you are buying does not already generate income then they might not consider the income in the calculations. They want a history from the property.

That was definitely true when I refinanced. Though I wasn't changing locations like I'm looking to do now. I had hoped it would work the same.

Originally Posted by Greg

Plus, if they use the rental income to qualify you for a larger loan you will move up to investor loan status which requires a larger down payment and has a higher interest rate.

Even if it's my only property and primary residence? Interesting. I'll call some lenders.

**CC Lifestyle Realty** · 04-30-2012, 12:43 PM

You are asking them to trust your word. Imagine how many applicants do something similar and if you were the bank if would take such a risk....especially in this market after having many foreclosures on the books.