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Loan Rules FHA: Income from rent to qualify for a mortgage loan
How do the FHA loan regulations say about using rent to qualify for an FHA housing benefit? Can I use rent revenues according to the FHA Credit Manual HUD 4000.1? Briefly, the response is that it will depend on whether the rent revenues meet the FHA's minimal requirements or not.
At the time of your housing claim process, your FHA member creditor will ask for a copy (never an original) of the applicable records relating to your occupation and your earnings, as well as your taxes, wage slips, etc. When your rental earnings are fully or partially based on rental payment, the creditor must also obtain documentary evidence.
The FHA Loan Regulations in HUD 4000.1 deal with this on page 202, beginning with the definitions of what is deemed to be rent revenue under the FHA Loan Programme: "Lease revenue relates to revenue that has been or will be obtained from the immovable property or other immovable property in question". Probably this is the intention for several purposes, among them the avoidance of "grey areas" in rentals.
Like I said before, evidence is needed, but another consideration in the lender's choice of whether to authorize this revenue? Does the borrowing party already have lessor expertise or not and does the claimant have proof of rent revenue from the fiscal records filed with the loan request? For those who have no story of being a lessor, the FHA loan requirement for rent must be understood in such circumstances:
"If the borrower has no historical rental income from this area since the last income statement. Mortgage creditors must review and record the suggested rental income by seeking an expert opinion showing a commercial rental (Fannie Mae Form 1025/Freddie Mac Form 72, Small Residential Income Property Appraisal Report ) and, if available, future rental agreements.
In such cases, HUD 4000.1 is used to determine a borrower's actual return from leased objects: "In order to determine the actual revenue from the land plot in question where the Mortgagor has no historical record of rent received from the land plot since the preceding return, the Mortgage Creditor must use the lower one.
Different regulations apply in cases where the borrowing party has experienced as a lessor. "In the event that the Mortgagor has a historical record of the subject's rent income since the last return, the Mortgage Creditor must review and record the current rent income by receiving the Mortgagor's most recent return, include Annex A, from the last two years.
In the case of real estate with less than two years rental income, the mortgage creditor must provide documentation of the date of purchase by submitting the certificate, settlement declaration or similar statutory instrument.