4 Responses to “How does rental income on a 1st mortgage affect mortgage affordability on a second home?”

1. infinite crisis 247 says:

   September 22, 2009 at 2:40 pm

   you would do the latter on the mortgage application. the 1000 dollar rent you are collecting would be income (and therefore taxable), and the 1000 mortgage payment is a debt (liability).
2. Biggie @ Arbor Mortgage says:

   September 25, 2009 at 6:04 am

   You are actually not charging enough. You are only allowed to take 75% of your rental income, so it is not a wash.
3. Tom B says:

   September 28, 2009 at 7:09 am

   When you apply for a mortgage on a second property and intend to use the first home as an investment you are able to duse that as income. Most banks will give you 75% of what your rent is as usable income. That 75% will be added to your income and you can offset that against your debt If you have any other questions just email me
4. 9 daughters says:

   September 30, 2009 at 9:17 pm

   I’ve been through this several times. A lot depends on the specific lender but here are the basics.

   1. All lenders factor in something for vacancies and repairs when calculating your rent income. My lenders count 80% of the rent as income, some lenders only 75%. At 80% a lender would say you’ve got $800 income per month, a $1,000 payment, so you’d have a net loss of $200 per month.

   2. Some lenders require a history of rent for a property before they’ll count it as income. Some require a year, some 2 years. The reason for this is to substantiate your claim of $1,000 a month rental income. In other words, what’s to stop you from saying it’s $1,000 a month when it’s really $600?