Qualifying for a Mortgage with Market Rents

Historically low interest rates, rapidly rising rental prices and high demand have created an ideal situation for clients to buy investment properties or upgrade from their current homes by becoming landlords. Clients interested in purchasing an investment property have the ability to use 75% of the projected fair market rent, obtained from the appraisal rental survey, before the house is even rented, as qualifying for debt-to-income (DTI) ratios on a mortgage. Homeowners wanting to upgrade, or those underwater on their mortgage, can leverage their buying power by turning their current home into an income property. Homeowners no longer have to have 30% equity in their homes to take advantage of using market rents to qualify. One of the biggest obstacles homebuyers face is being able to show enough income to offset their debts, in addition to a new proposed housing payment. As U.S. rent costs rose 3.3% nationally, with hot rental markets reaching 6.3%, income property potential has grown exponentially. Rising rents could actually help existing homeowners' buying power. PRM is always happy to help you or your clients learn more about these unique opportunities. Eligibility criteria differ for each loan scenario. Call or email PRM today!