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rental income on non subject investment property

The borrower owns an investment property with another person who is not going to be on the new loan. The investment property is not the subject property. The borrower claims everything 50% on her tax return. 50% of the monthly rent as well as 50% of all the liablities (insurance, managment fees, mortgage interest, repairs, taxes). How would the rental income be calculated for a fannie mae purchase and would her PITI on this investment property be excluded from her debt ? by jdcook_316_673 from Colts Neck, New Jersey. Aug 29th 2012 Reply


William J Acres (William_Acres)
#74 ranked lender in Arizona - 8,728 contributions

The underwriter will take actual expenses and income derived from the tax returns, however they will hit her with the full payment against her DTI.. Half owner or not.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Aug 29th 2012
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Daniel Hennek (danielhennek)
#71 ranked lender in Illinois - 23 contributions

JD,The rental income is just calculated off of her schedule E on the 1040's. If she claims everything 50/50 then she would only claim 50% of the taxes, 50% of the rental income, depreciation, insurance, etc. Fannie is going to have you calculate everything off the schedule E to determine net rental income so just pull the numbers of her schedule E and you already have the 50% calculated into the equation. Then you are going to use that net rental income to offset the PITI on that property. If you are using Encompass there is a spot in there to put in the ownership percentage of the property. Put it at 50%. There is no way to exclude the PITI if she is an owner of the property and obligated on the current mortgage. I hope this helps, good luck.

Aug 29th 2012
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JOHN IZZOLINO (john@omegaloans.net)
#84 ranked lender in New Jersey - 4 contributions

JD, Take the income off of Sch E, add back the depreciation, mortgage interest, taxes and insurance and subtract the PITI. Positive number goes to income, negative number goes to liabilities. Your Underwriter will decide whether your borrower will be hit for the full PITI or not.

Aug 29th 2012
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