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Updated almost 6 years ago,

User Stats

4
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0
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Carlo Con
  • Sacramento, CA
0
Votes |
4
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Schedule E income...what expenses to include/exclude for new loan

Carlo Con
  • Sacramento, CA
Posted

I would like to qualify for a new home loan.  I spoke to 3 different home loan officers and they have given me different information each time.  Here's my scenario.

I bought my house in 2016 and started renting it out in 2018.  My mortgage is $1400 and I am now receiving $1700 from renters.  I am trying to remove my mortgage liability when I apply for a new loan.  My tax return is not filed yet, but it looks like this:

Rental income: $20,400

expenses: $11,857 (mortgage insurance, property taxes, PMI, and home insurance)

depreciation: $4,809

Schedule E profit: $3,734

I have an additional $2,500 worth of home expenses which I did not include because I want to reduce mortgage liability but at the same time get the biggest tax return possible.

Question 1:  Should I include additional expenses in tax return?  Will the underwriter reduce the amount of what I can be approved for because of additional expenses?  

Question 2:  Will my $1700 wash out mortgage liability.  One loan officer said told me that they would only take 25% of $1700, which is 1,275.  Another loan officer told me that 25% rule only applies to "departing resident" and that I would not only wash out loan, but have an additional income of $300 a month.  

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