4

I’m qualified by my own income for a mortgage of X amount. But I want to qualify for a house of Z amount.

The property I purchase will be subleased to other tenants. I know I’ll be able to afford mortgage Z if the collective income is considered.

Is it possible to have a lender give me a mortgage with the income I’m projected to earn? If so, how?

6

Typically, no. Most lenders only count ~70% of rental income for loan qualification purposes, and only after you've had that rental income coming in for a couple years. The exceptions are typically made for business loans which require higher down payments and higher interest rates than traditional mortgages. Also, getting your first business loan can be difficult as they prefer to lend to people with experience. Similarly you may be able to find an investor/partner to go in on this with you, but likely not with exciting terms.

I wouldn't recommend stretching to get approved for more, tenants can flake out on rent, it would be best to have a place you can afford on your own and let the rent be gravy rather than having tenants that could put things in jeopardy.

3

The closer you can come to being able to afford the mortgage without tenants the more likely you will be approved. They only count a fraction of the expected rent, I have seen 2/3 to 3/4.

You need to make your financial situation as clean as possible:

  • Have significant down payment, don't go with the minimum down payment; the lender like to see you with equity that you will want to protect.
  • No additional loans/debts. Having additional loans such as for a car or school, or having high credit card debt will make your ability to afford the house less clear. The guideline is that these debts unrelated to your mortgage be less than 10%, you want to be even lower.
  • Prove you will have tenants. They will not count the entire amount, they figure you will have gaps where you don't have tenants, as one moves out before you can fill the spot. If you want them to count 2/3 of the expected rent as being available to help pay the mortgage show them a signed lease from your first group of tenants. It makes them more confident that you will have the estimated income.

It still might not get approved, they may suggest a co-signer. Avoid that, this site is filled with questions about how to end the co-signing relationship, or how to split ownership.

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