A borrower buys a duplex, will live in one unit, and the appraiser's rent schedule shows $1,900 a month for the other. If the applicable program permits 75% of documented market rent to be used, how much monthly rent enters the income calculation?
Correct Answer
C) Count 75% of $1,900, which is $1,425 once the vacancy allowance is taken
Rental income is usually taken at 75% of the market rent, the balance absorbing vacancy and maintenance. Other choices: a lease does not remove the vacancy factor; an owner-occupied two to four unit property does produce countable rent from the other units; and 50% is not the convention. Source: Rental income at 75% of market rent
Why This Is the Correct Answer
Rental income is usually taken at 75% of the market rent, the balance absorbing vacancy and maintenance. Other choices: a lease does not remove the vacancy factor; an owner-occupied two to four unit property does produce countable rent from the other units; and 50% is not the convention. Source: Rental income at 75% of market rent
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