Thinking about buying a home that has a rental suite? This can be a great idea if you want to help offset the cost of your home expenses, and it can also potentially help with qualifying for a mortgage on your new purchase.
Most lenders will allow you to add 50% of the rental income back to your income for qualifying, however we also have some who will consider 100% for qualified borrowers! This would increase the maximum mortgage available by approximately $65k.
Here are a few tips if you are considering this option:
Although it may not need to be a "legal" suite, they will want to see that it has a separate entrance along with a kitchen and bathroom in the unit
Some lenders may only consider income from the basement unit (in case you plan on living in the upper unit)
Roommate income is not allowed by the insurers
as rental income
Lenders will require a signed lease agreement as confirmation of the rental income. Most prefer a year lease. Some may consider a statement of economic rents (from an Appraiser) in lieu of the agreement
If you want to qualify for the 100% add back option, you will need to have a credit score greater than 680
Most lenders will not accept rental income from a family member
If you have any further questions or concerns, please feel free to contact me today!
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