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Description
Rental Property Investment Calculator document sample
Document Sample
Rental Income Matrix
Conventional Transactions
Subject Property
Investment Property (1-unit) Investment Property (2-4 unit) Primary Residence (2-4 unit)
Qualify with Full Payment Qualify with Full Payment Qualify with Full Payment Not Subject Property
Does Not Qualify with Full Does Not Qualify with Full Payment Does Not Qualify with Full
Payment Payment
Subject Property; Investment (1-unit)
Scenario Automated Underwriting Manual Underwriting
1. No Single Family Comparable Rent Schedule1 required 1. No Single Family Comparable Rent Schedule1 required
Qualifies with Full Payment
2. Reserves per AUS findings/Loan Product Description 2. Reserves according to Loan Product Description
1. Single Family Comparable Rent Schedule1 required
2. Rental Income documentation and calculation
o Two years tax returns including Schedule E
1. Single Family Comparable Rent Schedule1 required
Perform Cash Flow Analysis according to MGIC
2. Documentation per AUS findings
Cash Flow Analysis - AGI Method or SAM Method to
3. Rental Income for DTI calculation
arrive at net rental income.
o Calculate 75% of gross rental income to arrive at
o If, due to short time of ownership, property information is
net rental income
not on Schedule E, use 75% of gross rental income from
o Subtract full PITI from net rental income.
the Single Family Comparable Rent Schedule1 or 75% of
Positive results can be added to borrower’s
Does Not Qualify with current lease to arrive at net rental income
income
Full Payment 3. Rental Income for DTI calculation
Negative results must be included in liabilities
o Subtract full PITI from net rental income calculated in #2
4. Full payment of primary residence must be included in
above.
DTI
Positive results can be added to borrower’s income
5. Reserves per AUS findings/Loan Product Description
(not applicable to Portfolio products)
6. LP Only: Borrower has 2-year history of managing
Negative results must be included in liabilities
Investment Property
4. Full payment of primary residence must be included in DTI
7. LP Only: Proof of six months rent loss insurance,
5. Reserves according to loan product description
required
6. Borrower has two year history of managing Investment
Property
7. Proof of six months rent loss insurance, required
1
Single Family Comparable Rent Schedule is Fannie Mae Form 1007
2
Operating Income Statement is Fannie Mae Form 216 – may be waived if property reflected on 2 years tax returns.
05-11-2011 Page 1 of 4
Rental Income Matrix - continued
Subject Property; Investment (2-4 Unit)
Scenario Automated Underwriting Manual Underwriting
1. No Operating Income Statement2 required 1. No Operating Income Statement2 required
Qualifies with Full Payment
2. Reserves per AUS findings/Loan Product Description 2. Reserves according to Loan Product Description
1. Operating Income Statement2 required
2. Rental Income documentation and calculation
o Two years tax returns including Schedule E
1. No Operating Income Statement2 required
Perform Cash Flow Analysis according to MGIC
2. Documentation per AUS findings
Cash Flow Analysis - AGI Method or SAM Method to
3. Rental Income for DTI calculation
arrive at net rental income.
o Calculate 75% of gross rental income to arrive at
o If, due to short time of ownership, property information is
net rental income
not on Schedule E, use the lesser of Operating Income
o Subtract full PITI from net rental income.
Statement2 or 75% of current lease/income on appraisal
Positive results can be added to borrower’s
form 1025 to arrive at net rental income
Does Not Qualify with income
3. Rental Income for DTI calculation
Full Payment Negative results must be included in liabilities
o Subtract full PITI from net rental income calculated in #2
4. Full payment of primary residence must be included in
above.
DTI
Positive results can be added to borrower’s income
5. Reserves per AUS findings/Loan Product Description
(not applicable to Portfolio products – see Loan
6. LP Only: Borrower has two year history of managing
Product Description)
Investment Property
Negative results must be included in liabilities
7. LP Only: Proof of six months rent loss insurance,
4. Full payment of primary residence must be included in DTI
required
5. Reserves according to Loan Product Description
6. Borrower has two year history of managing Investment Property
7. Proof of six months rent loss insurance, required
1
Single Family Comparable Rent Schedule is Fannie Mae Form 1007
2
Operating Income Statement is Fannie Mae Form 216 – may be waived if property reflected on 2 years tax returns.
05-11-2011 Page 2 of 4
Rental Income Matrix - continued
Subject Property; Primary Residence (2-4 Unit)
Scenario Automated Underwriting Manual Underwriting
1. No Operating Income Statement2 required 1. No Operating Income Statement2 required
Qualifies with Full Payment
2. Reserves per AUS findings/Loan Product Description 2. Reserves according to Loan Product Description
1. Operating Income Statement2 required
2. Rental Income documentation and calculation
o Two years tax returns including Schedule E
1. No Operating Income Statement2 required
Perform Cash Flow Analysis according to MGIC Cash
2. Documentation per AUS findings
Flow Analysis - AGI Method or SAM Method to arrive
3. Rental Income for DTI calculation
at net rental income.
o Use amount shown on 2 years tax returns with
o If, due to short time of ownership, property information is
Does Not Qualify with Schedule E OR 75% of current lease/income on
not on Schedule E, use the lesser of Operating Income
Full Payment appraisal form 1025.
Statement2 or 75% of current lease/income on appraisal
4. Full payment of subject property (primary residence)
form 1025 to arrive at net rental income
must be included in DTI
3. Rental Income for DTI calculation
5. Reserves as per AUS findings/Loan Product
o Use amount calculated in #2 above.
Description
4. Full payment of subject property (primary residence) must be
included in DTI
5. Reserves according to Loan Product Description
1
Single Family Comparable Rent Schedule is Fannie Mae Form 1007
2
Operating Income Statement is Fannie Mae Form 216 – may be waived if property reflected on 2 years tax returns.
05-11-2011 Page 3 of 4
Rental Income Matrix - continued
Not Subject Property; 1-4 Units
Applies to Automated and Manual Underwriting
Current primary residence is • Use both the current residence and the proposed subject property mortgage payments to qualify the borrower for the new transaction.
pending sale but the o You may exclude the current property PITI subject to the following:
transaction will not be Fully executed sales contract with no financing contingencies (if financing contingencies do exist, provide a lender commitment for
closed (with title transfer to the buyer of the existing property, signed by the lender).
a new owner) prior to the
new transaction
• Reserve requirements:
o Six months PITI covering all liens on both properties.
• Two months reserves allowed only if 30% equity in the existing primary residence. Document with 1004 or 2055/1075 exterior
only ordered via CMS and can not be more than 60 days old at closing
o Manual Overlay required for LP as feedback message will not address this scenario.
• See also Bridge Loans in 7-702
Conversion of Primary • Use the current residence and the proposed subject property mortgage payments to qualify the borrower for the new transaction.
Residence to a Second • Reserve requirements:
Home o Six months PITI covering all liens on both properties.
• Two months reserves allowed only if 30% equity in the existing primary residence. Document with 1004 or 2055/1075 exterior
only ordered via CMS and can not be more than 60 days old at closing
o Manual Overlay required for LP as feedback message will not address this scenario.
• Must meet all guidelines for a Second Home.
Conversion of Primary • Use both the current residence and the proposed subject property mortgage payments to qualify the Borrower for the new transaction.
Residence to Investment o Rental income may be used to qualify only if the following are met:
Property • Borrower has 30% or more equity in the existing property. Document equity with 1004 or 2055/1075 exterior only ordered via
CMS and not more than 60 days old at closing.
o LP and Manual Underwriting Only: Borrower has two-year history of managing Investment Property documented with two years tax
returns including Schedule E.
o To calculate gross rental income, provide fully executed lease agreement AND receipt of security deposit from the tenant, including
supporting documentation of deposit into borrower’s account.
• Calculate 75% of gross rental income to arrive at net rental income
• Reserve requirements:
o Minimum six months reserves required for BOTH properties.
• Two months reserves allowed if 30% or more equity in the existing property. Document equity with 1004 or 2055/1075 exterior
only ordered via CMS and not more than 60 days old at closing.
ο Manual Overlay required for LP as feedback message will not address this scenario.
Additional Rental Property • AUS
o Document per findings
• Manual Underwriting
o Two years tax returns including Schedule E
o If, due to short time of ownership, property information is not on Schedule E, use 75% of gross rental income from current lease to arrive
at net rental income
o Subtract full PITI from net rental income
Positive results can be added to borrower’s income if two year history. If no history, can only offset full payment.
Negative results must be included in liabilities.
1
Single Family Comparable Rent Schedule is Fannie Mae Form 1007
2
Operating Income Statement is Fannie Mae Form 216 – may be waived if property reflected on 2 years tax returns.
05-11-2011 Page 4 of 4
