Thinking about buying a home that has a rental suite? This can be a great idea if you want to help offset the cost of your home expenses, and it can also potentially help with qualifying for a mortgage on your new purchase.
Most lenders will allow you to add 50% of the rental income back to your income for qualifying, however we also have some who will consider 100% for qualified borrowers! This would increase the maximum mortgage available by approximately $65k.
Here are a few tips if you are considering this option:
- Although it may not need to be a "legal" suite, they will want to see that it has a separate entrance along with a kitchen and bathroom in the unit
- Some lenders may only consider income from the basement unit (in case you plan on living in the upper unit)
- Roommate income is not allowed by the insurers as rental income
- Lenders will require a signed lease agreement as confirmation of the rental income. Most prefer a year lease. Some may consider a statement of economic rents (from an Appraiser) in lieu of the agreement
- If you want to qualify for the 100% add back option, you will need to have a credit score greater than 680
- Most lenders will not accept rental income from a family member
If you have any further questions or concerns, please feel free to contact me today!
The information and services offered on this Site are provided with the understanding that neither Dominion Lending Centres Inc., nor its suppliers or users are engaged in rendering legal or other professional services or advice. Although we strive for accuracy, timeliness and completeness, information quoted is not guaranteed and may change at any time and the information you obtain at this site is not, nor is it intended to be, legal advice. If you require specific advice regarding your own situation please contact me for consultation.
