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💡 Can Rental Income Generated from Short-term Rentals (i.e., Airbnb) Be Used to Qualify for a Loan?
The short answer is “yes.”
🏡 Rental income derived from the subject property is acceptable on a two- to four-unit principal residence in which the borrower occupies one of the units, or a one- to four-unit investment property. If the transaction is a purchase money transaction, information on Forms 1007/1025 may be used to derive rental income (including short-term rental income) for qualifying purposes. If the transaction is a refinance, rental income may be used when reported on the borrower’s individual tax returns (Schedule E). The alternative to the tax returns is a lease agreement; however, since short-term rental occupants usually execute a terms and conditions agreement (not a lease agreement), this alternative would not meet our requirements and therefore the income would not be eligible.
💰 Rental income derived from other property (not the subject property) must be documented either by a lease agreement or the most recent year's tax returns. A lease agreement is usually not an option in the case of short-term rentals since the occupants do not execute a lease agreement. However, if the borrower is reporting rental income (including short-term rental income) on the most recent year's tax returns, then rental income may be considered as qualifying income.
🏠 The Single Family Comparable Rent Schedule Form 1007 is intended to provide an appraiser with a familiar format to estimate the market rent of a property. Adjustments should be made only for those items of significant difference between the comparables and the subject property.
📈 The Small Residential Income Property Appraisal Report (FHLMC 72/FNMA 1025) is for the appraisal of two- to four-unit properties, including properties in PUD, condo or co-op projects. … Data indicating physical characteristics of the subject property such as age, materials and condition.
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