COVID-19: For a Forward or HECM mortgage, are there additional requirements when using rental income to qualify a borrower during the COVID-19 National Emergency?

In addition to the requirements in Single Family Housing Policy Handbook 4000.1 Sections II.A.4.c.xii(I) and II.A.5.b.xii.(I) Rental Income (TOTAL Mortgage Scorecard and Manual) and Section 3.50 through Section 3.55 of the Home Equity Conversion Mortgage (HECM) Financial Assessment and Property Charge Guide; where a Borrower is qualifying utilizing rental income, for each property generating rental income the Mortgagee must either:

  • Reduce the effective income associated with the calculation of rental income by 25 percent, or
  • Verify six months' Principal, Interest, Taxes, and Insurance (PITI) reserves (this option is applicable for Forward Mortgages only), or
  • Verify the Borrower has received the previous two months' rental payments as evidenced by Borrower’s bank statements showing the deposit.  (This option is applicable only for Borrowers with a history of rental income from the property). 
The verification of Rental Income guidance in this Mortgagee Letter (ML) 2020-24 and extended in MLs 2020-40, 2020-46 and 2021-07 is effective for case numbers assigned on or before June 30, 2021.

For additional information see:



All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Topic Number: KA-05544