The Veridian Blog

Converting a current primary residence to an investment property is a popular choice for homeowners looking for the flexibility to purchase a new home without having to immediately sell their current home.  Rental income, however, can sometimes make or break this strategy.  In order to be able to factor in rental income, all of the following conditions must be met:

1. Up to 75% of the rental income may be used to offset the mortgage payment with documented 30% equity in the existing property

2. 30% equity must be verified with a HVCC appraisal or AVM, minus outstanding liens

3. The rental income must be documented with a copy of the fully executed lease agreement

4. Copy of receipt of the security deposit from the tenant and proof of deposit into borrower's account is required

If these conditions CANNOT be met, then payment for both properties must be used to qualify the borrower.  In addition, some lenders will have higher reserve requirements for PITI payments.