A borrower receives $1,800 monthly in rental income from a duplex they live in. What is the maximum amount that can typically be used for qualifying purposes?
Correct Answer
B) $1,350
For owner-occupied properties with rental income (like duplexes), lenders typically use 75% of the gross rental income: $1,800 × 0.75 = $1,350. The 25% reduction accounts for vacancy and collection losses.
Why This Is the Correct Answer
For owner-occupied properties with rental income (like duplexes), lenders typically use 75% of the gross rental income: $1,800 × 0.75 = $1,350. The 25% reduction accounts for vacancy and collection losses.
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Previous Question
A lender's automated valuation model (AVM) indicates a property value of $300,000, but the appraisal comes in at $275,000. The underwriter asks the MLO to have the appraiser 'review the AVM data.' This request is:
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Under the anti-steering rule, if a borrower qualifies for a 15-year fixed rate loan at 5.5%, a 30-year fixed rate loan at 6.0%, and a 30-year interest-only loan at 5.0%, which loan satisfies the 'lowest rate without risky features' requirement?