My lender will not consider my Short Term Rental income

[Nico C.]

My lender will not consider income from my short term rentals as part of my Debt to Income Ratio. Any suggestions or workarounds? (Besides submitting a bogus lease for a “long term tenant”... yes this has been suggested... not doing it.)

[Chris Mason]

Originally posted by @Jay Hinrichs:

@Chris Mason  Chris can you help this Member get his loan done ?

The 12 month lease doesn't have to be bogus. It can be a 12 month lease with your STR property manager. It can/should be a real lease, that happens to allow for subletting, there are a few other little things to watch out for.

In general Fannie/Freddie require 2 years on tax returns for self employment. The exception is real estate landlording, since that's the one form of self employment Fannie/Freddie can claim to actually understand, based on Fannie Mae having over 80 years of loan performance data. When you sign that lease, you're putting yourself in that box that Fannie Mae understands. 

That exception has not been extended to include self managed short term rentals. So, for the time being, generally it takes 2 years before income from each new "business" can be counted in the DTI math.