Accessory unit rent not counted as income. What? What? What?

[Lisa Martin]

We have been careful to document and report all rental income to the IRS from our accessory unit attached to personal residence for the past 4 years.

In our current application for investment loans our lender is telling us that Fannie/Freddie will not let them count that rental income for DTI calculations. It is a good chunk of income and makes a difference to us as we pay our expenses each month. Qualifying was not a problem before as we had enough regular employment income, but I've now left my W2 job to become a real estate investor. The accessory unit income counting is needed in our DTI calc.

Is this normal?  Accessory unit has a separate address yet is not a "duplex".  

Any insight?   I'm stumped why it doesn't count.

[Jay Hurst]

Quote from @Lisa Martin:

We have been careful to document and report all rental income to the IRS from our accessory unit attached to personal residence for the past 4 years.

In our current application for investment loans our lender is telling us that Fannie/Freddie will not let them count that rental income for DTI calculations. It is a good chunk of income and makes a difference to us as we pay our expenses each month. Qualifying was not a problem before as we had enough regular employment income, but I've now left my W2 job to become a real estate investor. The accessory unit income counting is needed in our DTI calc.

Is this normal?  Accessory unit has a separate address yet is not a "duplex".  

Any insight?   I'm stumped why it doesn't count.

 @Lisa Martin   They are likely calling it "boarder" income which is income from boarders principal residence. This income CANNOT be counted except in a very rare cases or for HomeReady mortgage which is only for owner occupied mortgages so not relevant here.

https://selling-guide.fanniemae.com/Selling-Guide/Originatio...

HOWEVER, you mention above that the ADU has a different address, and it is on your tax returns. You CAN use rental income in that case if your property was a duplex. If I was your LO I would be arguing for this income to be treated like it would if it was a duplex because of the different address. This is not the same as a boarder renting a room from you.