Rental income Effective for Mortgages with Settlement Dates on and after March 1, 2019; however, Sellers may implement these changes earlier if they are able to do so In Bulletin 2018-13, we further extended the effective date for rental income requirements announced in Bulletin 2017-12 to March 1, 2019 to enable us to review and consider all Seller feedback.

After our review of Seller feedback, coupled with our internal review and analysis, we are updating our requirements as follows. 

• For simplification, we are removing the requirement that the net rental income considered for qualification must not exceed 30% of the Borrower’s monthly qualifying income unless the Borrower has a minimum of one-year rental management experience

• To support sustainable homeownership through responsible lending practices, we are adding the requirements: 

➢ The Borrower must own a Primary Residence to use rental income to qualify when purchasing a new rental property; and 

➢ Whether purchasing a new rental property or converting a Primary Residence to a rental property, if the Borrower does not have a minimum of one-year investment property management experience: 
                                o The rental income can only offset the principal, interest, taxes and insurance (PITI) of the rental property; and

                                o Rental income exceeding the PITI cannot be added to the Borrower’s gross monthly income to qualify Additionally, we will require only the                                             Borrower’s most recent federal income tax return, in lieu of the most recent two years’ federal income tax returns. Rental income must be                                             annualized unless the Mortgage file documents that the property was renovated or purchased late in the prior calendar year.