Jumbo guideline Redwood 90 QM

Updated: 12/15/2017
Article #: 12



The borrower will be retaining the exit home as a rental, it is their current primary and they own no other real estate.  Can we offset the current mortgage with a 12 month lease?  If so can we use the 25% vacancy allowance?   

 

Hello Linda Wisner,
Below are RW select 90 QM guidelines re: using rental income on departing residence.   

Rental Income - Departing Primary Residence

  • If the borrower is converting their current primary residence to a rental property and using rental income to offset the payment the following requirements apply:
    • Borrower must have documented equity in departure residence of 25%.
    • Documented equity may be evidenced by an exterior or full appraisal dated within six (6) months of subject transaction OR
    • Documented equity may be evidenced by the original sales price and the current unpaid principal balance.
    • Copy of current lease agreement.
    • Copy of security deposit and evidence of deposit to borrower’s account.
    • If rental income is not available on the borrower’s tax returns, net rental income should be calculated using gross rents X75% minus PITIA.

 






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