Aaron Sandoval

Rental income may be able to help you qualify for a mortgage but don’t automatically assume the full monthly rent gets added to your income.

Under current Fannie Mae guidance, when eligible lease or market-rent documentation is used, qualifying rental income is generally calculated at 75% of the gross monthly rent to account for vacancy and ongoing maintenance expenses.

The way that income is actually applied depends on the property, transaction, rental history and documentation.

Comment RENTAL if you’re keeping your current home, buying an investment property, or wondering how rental income could affect your numbers.

Starting a new job soon? You may not always need to wait for your first paycheck before buying a home. Under current Fannie Mae guidance, certain eligible purchase transactions can use income from a fully executed employment offer or contract, subject to specific requirements around the job, start date, income type, property and financial resources.

Don’t assume a job change automatically puts homeownership on hold.

Comment JOB if you have an offer letter and want to know what a lender would need to review.

Student loan payment showing $0?

That doesn’t automatically tell us what payment has to be used for your mortgage.

For current Fannie Mae conventional guidelines, a documented income-driven repayment plan with an actual required $0 payment may allow the lender to qualify using $0. Deferred or forbearance loans can require a different calculation.

Other mortgage programs may handle student loans differently.

So before assuming your student debt keeps you from buying or assuming it won’t count at all let’s run it correctly.

Comment STUDENT if you want help figuring out what payment would be used.

Your debt-to-income ratio — DTI — is one of the numbers lenders use when evaluating a mortgage.

It compares your qualifying monthly income with your monthly obligations, including the proposed housing payment and other recurring debts.

But there isn’t one universal DTI cutoff that tells every borrower whether they qualify. Loan program, underwriting, credit and the rest of the file can matter.

Before you rule yourself out based on an online calculator, let someone actually run the scenario.

Comment DTI if you want help calculating yours.

How much money do I need to close?” is only part of the asset conversation.

Some mortgage scenarios also require reserves — money or eligible assets that remain available after closing. Fannie Mae measures reserves in months of the qualifying housing payment, and the amount required can depend on factors like occupancy type, number of units, transaction type, and other financed properties.

A one-unit primary residence may have no minimum conventional reserve requirement, while other transactions can require more.

Comment RESERVES if you want to know what that could look like for your scenario.

Family helping you buy a home? That money may be usable.

On many conventional loans, eligible gift funds can be used toward the down payment, closing costs, and in some cases reserves. But the source and transfer generally have to be properly documented, including a gift letter stating that repayment is not expected.

Best advice: talk to your lender before the money gets moved.

Comment GIFT if you want to know how to handle it correctly.

HomeBuying

Self-employed does not mean “can’t get a mortgage.” 🏡

It just means the income analysis can look different.

Depending on the loan and borrower, we may need to review tax returns, business income, expenses, ownership and the overall income trend to determine how much income can actually be used for qualification.

If you own a business and homeownership is on your radar, don’t rule yourself out before someone actually runs the numbers.

Comment BUSINESS and I’ll tell you what we’d typically start with.

A mortgage recast can sometimes lower your payment without replacing your mortgage.

You make a substantial principal payment, and if the loan is eligible, the servicer recalculates the payment using the new lower balance over the remaining term.

That can be very different from refinancing because you’re not automatically taking out a brand-new loan.

Not every mortgage can be recast, so always check the loan and servicer requirements first.

Comment RECAST if you want to see the difference between a recast and refinance.