Freddie Mac announced changes to rental income requirements in Bulletin 2018-19 issued October 31, 2018. The significant changes are outlined below. Rental Income to Qualify Freddie Mac has implemented the following requirements when using rental income for qualifying:
Rental Income Documentation
Freddie Mac’s updated rental income requirements apply as follows:
The Homebridge Freddie Mac guidelines have been updated with this information and posted on the Homebridge website at www.homebridgewholesale.com. If you have any questions, please contact your Account Executive. Can I use rental income from the vacating primary residence?When buying another primary residence, VA loans allow the buyer to count up to 100% of the new rental income on the departing residence. In order to count the rental income, a 12-month lease must be provided, and most lenders even require proof of the first month's rent or security deposit.
Does Freddie Mac allow rental income?Rental income may be used in qualifying the borrower(s) provided that the requirements of Guide Section 5306.1 and the documentation requirements contained in Guide Sections 5102.3 and 5102.4 and Chapter 5302 are met. Use the following chart as a tool to help summarize these rental income requirements.
How many years of tax returns does Freddie Mac require for rental income?Federal income tax return requirements
Complete signed federal individual (Form 1040) income tax returns for the most recent two years.
Does Freddie Mac allow short term rental income?We are updating requirements for traditional rental market income sources (e.g., rental income from a one-year lease). A one-year term lease lends support to income stability and continuance, so a one-year history of rental income reported on Schedule E is acceptable.
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