When it comes to rental income, lenders can be particular. Some have strict policies against using rental income to qualify for a mortgage, while others are OK with it. If you are shopping for a mortgage in Pennsylvania, nobody understands the ins and outs of the lending industry like us at, MortgageDepot.
Did you know that the VA allows borrowers to use their rental income to qualify for a mortgage? Like anything, this comes with a few restrictions. If you plan to go the VA route and want your rental income to count, listen up! We have everything you need to know about this unique situation.
Tricky Terms Defined
Before we launch into a discussion about VA loans and rental income, let’s define some of the lingo that you’re about to hear. Here’s a quick vocabulary lesson to help you get a good grasp on VA requirements:
Non-subject rental income: Rental income that comes from a property that you currently own.
PITI: This acronym stands for “principal, interest, taxes and insurance.” It represents your total monthly mortgage payment.
AUS: This stands for “automated underwriting system.” Multiple systems exist, but they all perform a similar function—they all use an algorithm to determine your mortgage eligibility.
Using Your Rental Income To Secure a VA Mortgage
These days, many people earn more than enough money to accomplish their financial goals through investment properties. Unfortunately, rental income is risky from a lender’s perspective. That’s why VA mortgages have specific qualification requirements for using rental income. Here’s what you need to know:
If you plan to use non-subject rental income, you need at least three months of PITI reserves to qualify for a VA loan.
To purchase a primary single-family residence, you’ll need a credit score of at least 580. You will also need an approved/eligible status reported by an AUS.
If you plan to purchase a property with between two and four units, you will need at least six months of PITI. This requirement applies to subject and non-subject rental income.
To purchase a property with between two and four units, you’ll need a credit score of at least 620. You will also need a refer/eligible or approved/eligible status reported by an AUS.
Contact MortgageDepot Today!
If you’re seeking a VA mortgage in Pennsylvania, don’t do it alone! Contact MortgageDepot and let our experienced loan officers guide you through the process.