4501.9: Borrower income and qualifying ratios for Home Possible® Mortgages (11/30/18)

© Freddie Mac Single-Family Seller Servicer Guide

(a) Rental income from 1-unit Primary Residence

Rental income from a 1-unit Primary Residence may be considered as stable monthly income (as defined in Section 5301.1) provided it meets the requirements in Section 5306.1 or the following:

• Connection with Borrower. The person providing the rental income and the Borrower:
  
  • Have resided together for at least one year
  • Will continue residing together in the new residence, and
  • The person providing the rental income provides appropriate documentation to evidence residency with the Borrower (i.e., copy of a driver's license, bill, bank statement, etc., that shows the address of that person to be the same as the Borrower's address)
• Rental payment. Rental income from the person residing in the Mortgaged Premises:
  
  • Has been paid to the Borrower for the past 12 months on a regular basis
  • Can be verified by the Borrower with evidence showing receipt of regular payments of rental income to the Borrower for the past 12 months (i.e., copies of cancelled checks)
  • Does not exceed 30% of total income used to qualify for the Mortgage
• The Mortgage file must contain a written statement from the Borrower affirming:
  
  • The source of the rental income
  • The fact that the person providing the rental income has resided with the Borrower for the past year and intends to continue residing with the Borrower in the new residence for the foreseeable future

Rental income that meets the above requirements may be generated from an accessory unit. In addition, refer to Chapter 5601 for property eligibility and appraisal requirements.

(b) Rental income from 2- to 4-unit Primary Residences

Rental income from a 2- to 4-unit Primary Residence that meets the requirements of Section 5306.1 may be considered as stable monthly income.

(c) Contribution to total qualifying income from Borrowers with insufficient credit history

For Manually Underwritten Mortgages, the Seller may consider as qualifying income, the income contributed by a Borrower with insufficient credit history, as described in Section 4501.8(b), provided the amount contributed by the Borrower with insufficient credit history is not more than 30% of the total qualifying income.

(d) Qualifying ratios

There is no maximum monthly housing expense-to-income ratio.Debt payment-to-income ratios must not exceed the following limits: