Can I use future bedroom rental income for House Hack VA loan?

Question

I am currently in the process of being preapproved for my VA loan.  I plan to have my letter tomorrow.  I am a regional airline pilot in Houston and have many coworkers seriously interested in renting bedrooms from me when I get my house.  My loan limit is a little bit lower than I was hoping for because of my child support.  I asked my mortgage broker from Veterans United if I could use my prospective rental income to help get a larger loan but he said no, I cannot. The guy I'm working with seems very sharp so I trust his opinion but I could have sworn I read in some of the real estate investing books that you can use future income to obtain a larger loan.  Does anyone know if I can use my future bedroom rental income to obtain a larger loan?  I will be renting to friends and can likely convince them to sign a lease and pay their deposit now, even before we move in, if it helps me.

Elise Marquette · Answer

@Scott Diller not unless you have experience getting income from rented units. This is not a rule that varies from lender to lender. The VA dictates this and in order to make the loan conform to VA standards lenders have to play by their rules.

Dave Skow · Answer

@Scott Diller-  if you remain in the house and rent  rooms -  using the boarder income for additonal qualifying income  on a future  not possible ....if you are  planning to move from  present home and rent the  entire  home out adn buy a new property   - than  yes - you can use a potion of this  rental income to help offset the mortgage payment

Paul Welden · Answer

@Tim Swen

The appraiser does a market rent evaluation at the same time they are doing the price evaluation appraisal. This typically cost about $150-$250 extra.

John Warren · Answer

@Scott Diller you need to speak to a qualified lender who knows this space. I am active here in Chicago and recommend @Joshua Jones to all of my clients. He has done multiple VA house hack deals for clients and he knows the program inside and out. You should connect with him and see if he can help with this question.

Paul Welden · Answer

@Scott Diller Yes you can use the rent from a MFH to help qualify for the mortgage.

As an example, FHA (including FHA 203k) allows you to buy a 1-4 unit dwelling as long as you reside in the property as your primary residence for a min of 1 year. You can use 75% of the market rent for the units you won't occupy to help you qualify for the mortgage.

Hope this helps.

Justin Poulsen · Answer

Scott, I am an airline pilot myself, I rent to other airline pilots in Chicago, and when I got my furlough notice last year I became a loan officer.  So, here's my take on your situation...

There is one loan program that allows the use of "Boarder income".  That is a home ready loan.  To use the boarder income you need a 12 month history of receiving it before it would be counted towards qualifying.  So if you have had a room mate for the previous 12 months who payed you rent and they are moving with you to the new place then you are in business.That same home ready loan will even allow you to count income from a mother in law unit towards qualifying

If you're buying a multi unit property almost all loan programs will allow you to count a % of the expected rents from the other unit(s) towards qualifying.

Collin Garbarino · Answer

It's going to depend on the lender, but in my experience, if you have a signed lease in hand, a lender is more willing to count it.

Wale Lawal · Answer

@Scott Diller All you need is 1 rockstar lender.

Alvin Sylvain · Answer

So, how many mortgage brokers do you know? How many banks? How many lenders?

You don't suppose all of them use the same criteria? No, I don't think so.

So if you can't get a loan from this lender, maybe it's time to find a different one. Find out what their policy on rental income is before you start with them.

BTW, getting your friends to sign a commitment letter of some kind, maybe even a lease, sounds like a very good idea.

But still, this guy isn't doing you any favors, dump him and find somebody else. Oh yah, you've already started the process with this guy, haven't you? Shucky Darns! OK, so start another process with somebody else. If he gets offended, too bad, explain your reasons and move on.

I remember my wife and I were quite upset with our lender a few years back, even though we did get the loan. So when I went to get pre-approved for another loan, I was ready to go to anybody else. I don't know how, but somehow he found out my credit was pulled and he called me up, all bent out of shape. Oh well, them's the breaks, pal.

Jason Swanson · Answer

Lender and Veteran here.  One response said you can just get a friend to write a letter.  Yeah,  that's Mortgage fraud. The secret is finding a property with existing tenants who will stay in place.  From there,  you need a month security deposit and at least a one year lease in hand to give the lender.  The VA won't allow "border income" aka renting rooms. Rare exceptions MAY apply if the boarder is a health care worker assisting you with your disability. Although, this is more for Fannie. Freddie does

Anyway you slice it... the lender can only is 75% of the rental amount received.

Hope this helps!

Jason

Can I use future bedroom rental income for House Hack VA loan?

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