Fannie Mae Rental- Calculator 1037 – Patriot Pacific Financial Corp

Rental Income Worksheet

Principal Residence, 2- to 4-unit Property: Monthly Qualifying Rental Income

Documentation Required:

§ Schedule E (IRS Form 1040) OR

Address of Principal Residence:

§ Lease Agreement or Fannie Mae Form 1007 or Form 1025

Enter

Rental Unit

Step 1.

When using Schedule E, determine the number of months the property was in service by dividing the Fair Rental Days by 30.

If Fair Rental Days are not reported, the property is considered to be in service for 12 months unless there is evidence of a shorter term of service.

Step 1. Result: The number of months the property was in service:

Result

Step 2.

Calculate monthly qualifying rental income using Step 2A: Schedule E OR Step 2B: Lease Agreement or Fannie Mae Form 1025.

Step 2 A. Schedule E - Part I

For each property complete ONLY 2A or 2B

A1 Enter total rents received (from the non-owner-occupied units). May enter rent from individual unit(s) or combine.

Enter

A2 Subtract total expenses.

Subtract

A3Add back insurance expense.

Add

A4Add back mortgage interest paid.

Add

A5Add back tax expense.

Add

A6Add back homeowners’ association dues. This expense must be specifically identified on Schedule E in order to add it back.

Add

A7Add back depreciation expense or depletion.

Add

A8Add back any one-time extraordinary expense (e.g., casualty loss). There must be evidence of the nature of the one-time extraordinary expense.

Add

Equals adjusted rental income.

Total

00,00.00

A9 Divide by the number of months the property was in service (Step 1 Result).

Divide

00,00.00

Step 2A. Result: Monthly qualifying rental income (or loss):

Result

00,00.00

Step 2B. Lease Agreement OR Fannie Mae Form 1025

For each property complete ONLY 2A or 2B

This method is used when the transaction is a purchase, the property was acquired subsequent to the most recent tax filing.

B1Enter the gross monthly rent (from the lease agreement) or market rent (from Form 1025) for the applicable rental unit

Enter

B2Multiply gross monthly rent or market rent by 75% (.75). The remaining 25% accounts for vacancy loss, maintenance, and management expenses.

Multiply

x.75

Equals monthly rental income per unit

Total

B3 Combine the monthly rental income of all non-owner-occupied rental units (up to a maximum of 3 rental units since rental income is not eligible on the unit occupied by the borrower).

Add

00,00.00

Step 2B. Result: Monthly qualifying rental income:

Result

00,00.00

Step 3.

Determine the qualifying impact using the combined result of Step 2A or Step 2B.

3A Add the monthly qualifying rental income to the borrower’s monthly qualifying income.

3B Identify the full amount of the PITIA as the borrower’s primary housing expense and include it in the debt-to-income ratio.
Use proposed PITIA when the subject property; existing PITIA when not the subject property.

DU Data Entry

Monthly Income and Combined Housing Expenses

Mortgage Liabilities

Subject Property

Enter the amount of the monthly qualifying income “Subject Net Cash.”

Include as the borrower’s primary housing expense. For refinance transactions, identify the mortgage as a subject property lien.

Non-Subject Property

Enter the amount of the monthly qualifying income “Net Rental.”

Include as the borrower’s primary housing expense.

Rental Income Worksheet

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