How to Qualify Rental Income

How to Qualify Rental Income
Is this file high ratio or conventional?
If
High Ratio
Subject:
 Add 50% of gross rents to income
 Qualify on P&I
 Remove T&H if sent to CMHC
Other Property:
 Rental Calculator
Look at how you qualify the customer:
If
Conventional
1. Net Rents Calculator
-Subject property:
-50% gross rents add to income
-Qualify only on P&I
-Other Properties:
-Surplus: Add to ‘Other Income’
-Shortfall: Add to ‘Other Liabilities’
-Remove property from ‘Other properties and
input property info in ‘Other Assets’
2. 80% rental offset for all properties on 5 yr fixed deals
ONLY
-Applies to all properties (subject property and other
properties)
HOT TIP!
-80% rental offset typically works better for customers with
more debt
-The Net Rents worksheet typically works better for customers
with less debt
NOTES!! Ensure you put in your notes explaining how you have
qualified rental income.
Genworth allows:



Illegal suites
Opinion of rents from appraiser/Letter of economic rents
Age restricted properties
Scenario: Subject Owner-Occupied Purchase + Rentals
For all products:
Rental calculator for other properties
High Ratio
Scenario: Owner-Occupied Rental + Rentals
5 & 3 yr fixed: 50% gross rents add to income
ARM’s: 50% gross rents add to income Take out T+H
Scenario: Non Owner-Occupied Rental + Rentals
Conventional
5 yr fixed: 80% rental offset on all properties
All other products: 50% for subject + rental calculator
Scenario: Owner-Occupied Rental + Rentals
5 yr fixed: 80% rental offset on all properties
All other products: 50% subject + rental calculator
*Insurer allocation may depend on product and program.
Good to Know’s before you send in a Rental


Is this a rental refinance? Prepare your client that they may be asked to send in an appraisal. We have been
seeing over valued refinances come in lately and insurers have been asking for more appraisals
Is your deal in your client’s holding company name? Make the Holding company the primary applicant and
your client the secondary applicant.
What should be in your notes?
 Make sure you put in your notes how you qualified the rental income and state that you have sent your
rental spreadsheet to Documents@merixfinancial.com
 Let us know whether your rental suites are legal or not
 Let us know what product you’re looking for
MERIX FINANCIAL PARTNERING FOR SUCCESS
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