When can I use rental income for a new loan?

[Ryan VanPatten]

Hi,

I have a townhome that I live in and rent additional rooms.  Can I use this income as part of my income when I apply for another loan?  I bought it in Augusut 2012, so the two year mark is right around the corner.

I figure I'd throw the question out on BP before going back to my orginial loan officer.

Thanks

[Jon Holdman]

Lenders can vary somewhat. Typically they will use actuals from your tax returns for existing properties, once you meet whatever time threshold they have in place. Savvy lenders will add depreciation back in. Then they use the 75%*rent - PITI = net rental income for a new property. For the DTI calculation, if net rental income is positive, it counts toward income and improves your DTI. If its negative it counts toward the debt payment and hurts your DTI.