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When you qualify to get a mortgage, one of the most important factors is your income. In general, higher incomes open up more mortgage options. With that in mind, we’ve got a new announcement that should be exciting for many homeowners.

If you rent out your home through Airbnb, you can now count that income toward your qualification when getting a refinance on your primary property through Fannie Mae.

We’ll go over what this could mean for homeowners and get into exactly what you need to know to qualify for the program.

The Importance of DTI

Your debt-to-income (DTI) ratio is one of the principal ways your lender determines whether you qualify for any loan. Simply put, it’s a comparison of your monthly income from all sources against monthly debt payments you have showing up on your credit. These debt payments could be for revolving credit (like credit cards) or installment loans (like mortgage, student loan and car payments).

Being able to add any amount of income from your Airbnb rentals will lower your DTI and could increase your ability to qualify for better mortgage terms.

Let’s do a quick example of how DTI works: You made $50,000 last year. Your monthly debt payments are as follows: $300 car payment, $700 student loan payment, $900 mortgage and minimum payments on credit cards totaling $400.

That puts your monthly DTI at around 55%, which is too high to qualify to refinance under many programs. However, let’s say that in addition to income you have from your salary, you also made $600 per month renting out a spare bedroom to Airbnb guests. When we redo your hypothetical monthly income calculation, your DTI is around 48%. This is much better for your mortgage qualification prospects.

Requirements of the Program

As with any loan qualification scenario, there’s one qualification guideline that needs to be met before you can use your Airbnb income to help qualify.

It’s important to note that this is only available on rate/term and cash-out refinances for 1- to 4-unit primary properties.

Income Documentation

In order to use your Airbnb income, you must be able to document the proof of this income. In order to do that, we require these two documents:

  • Two years of signed tax returns with Schedule E or Schedule C attached
  • Airbnb host report

In order to qualify, you must have at least a 12-month history of rental income through Airbnb. However, if you have 24+ months of income, we may be able to use more of your income to help you qualify for a lower DTI.

Unlike longer-term rental properties, it’s not required that you have a lease agreement in place.

If you’re interested in refinancing, you can get started online or give one of our Home Loan Experts a call at (800) 785-4788. We’ll be more than happy to help you. If you have any questions, leave them in the comments below.

This Post Has 6 Comments

  1. Hi,

    If we took a break from Airbnb due to Covid and start back up again will we have to wait the full 12 months or can we apply after 3 months (1 quarter).

    1. Hi Brian:

      I want to make sure you get the right info. I suggest you reach out to one of our Home Loan Experts at (800) 442-4383. Thanks!

    1. Hi Kenneth:

      As long as you occupy the residence for more than a total of six months out of the year, you don’t have to refinance anything as an investment property. If you don’t plan on living there six months out of the year, then it either a second home or investment property depending on whether you live there at all. It also depends on your mortgage contract, so look at your documentation, but you may be allowed to convert your primary property to an investment property while keeping the same interest rate if you’ve lived there longer than a time specified in your mortgage contract. It’s important to note that different lenders may also have different requirements.

      If you’re actually looking at refinancing to take cash out or lower your interest rate, it needs to be a primary property under this program to use your Airbnb income. You can get started online using Rocket Mortgage or give one of our Home Loan Experts a call at (888) 980-6716.

  2. Hello,
    I would like to know if I want to buy another house can I also include my AirBnB income in my overall income in order to have a lower debt to income ratio. Thank you.

    1. Hi Reggy:

      You can only use the income to qualify on a refinance of your primary home at this time. I’m sorry.

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