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 Rental Unit 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 00,00.00 00,00.00 A9 Divide by the number of months the property was in service (Step 1 Result). Divide 00,00.00 00,00.00 00,00.00 Step 2A. Result: Monthly qualifying rental income (or loss): Result 00,00.00 00,00.00 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 x.75 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. Reset Print
