Fannie Mae Rental-Calculator 1038

Rental Income Worksheet

Individual Rental Income from Investment Property(s): Monthly Qualifying Rental Income (or Loss)

Documentation Required:

§ Schedule E (IRS Form 1040) OR
§ Lease Agreement or Fannie Mae Form 1007 or Form 1025

Enter

Investment Property Address

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

A1Enter total rents received.

Enter

A2 Enter total expenses.

Subtract

A3Enter insurance expense.

Add

A4Enter mortgage interest paid.

Add

A5Enter tax expense.

Add

A6Enter homeowners’ association dues.
This expense must be specifically identified on Schedule E in order to add it back.

Add

A7Enter depreciation expense or depletion.

Add

A8Enter 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

A9Enter the number of months the property was in service (Step 1 Result).

Divide

00,00.00

Equals adjusted monthly rental income

Total

00,00.00

A10Enter proposed PITIA (for subject property) or
existing PITIA (for non-subject property).

Subtract

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

Result

00,00.00

Step 2B. Lease Agreement OR Fannie Mae Form 1007 or 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, or the lender has justification for using a lease agreement.

B1Enter the gross monthly rent (from the lease agreement) or market rent (reported on Form 1007 or Form 1025).
For multi-unit properties, combine gross rent from all rental units.

Enter

B2The remaining 25% accounts for vacancy loss, maintenance, and management expenses.

Multiply

x.75

Equals adjusted monthly rental income.

Total

B3 Enter proposed PITIA (for subject property) or existing PITIA (for non-subject property).

Subtract

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

Multiply

00,00.00

Step 3.

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

If the result of Step 2A or 2B is positive, add the positive amount to the borrower’s monthly qualifying income. Because the PITIA expense was included in the calculations above, do not add it to the debt-to-income (DTI) ratio.

00,00.00

If the result of Step 2A or 2B is negative, include the amount of the loss in the borrower’s monthly expenses when calculating the DTI ratio.

DU Data Entry

Monthly Income and Combined Housing Expenses

Mortgage Liabilities

Subject Property

Enter the amount of the monthly qualifying income (positive result) or monthly qualifying loss (negative result) in “Subject Net Cash.”

For refinance transactions, identify the mortgage as a subject property lien.

Non-Subject Property

Enter the amount of the monthly qualifying income (positive result) or monthly qualifying loss (negative result) in “Net Rental.”

Identify the mortgage as a rental property lien.