More and more borrowers are using VRBO, Airbnb, and other similar short-term rental companies to maximize their income on investment properties. The requirements for using this source of income to qualify will depend on whether the loan is Agency or Non-Agency and various other factors.
For example, Fannie Mae will allow short term rental income with the following criteria:
- At least a 1-year history of receipt on the borrower’s 1040s;
- Form 1007 or 1025 with market rents equal or higher than rents on 1040s;
- Standard rental income cash flow analysis.
Non-Agency investors will consider with the following:
- 2-year history of receipt on the 1040s;
- Evidence property is still being offered in similar manner;
- Standard rental income cash flow analysis; and
- Any specific investor guideline and or overlays.
Note: Non-Agency investors will categorize the loan as Non-QM due to not having a standard lease agreement. Agency loans have temporary QM status and therefore do not require a lease if the specific scenario does not require one.