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).
For additional information see:
- Handbook 4000.1 II.A.4.c.xii(I) and II.A.5.b.xii(I)t: https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh
- Mortgagee Letter 2016-10 and the attached revised HECM Financial Assessment and Property Charge Guide, Section 3.26, and
- Mortgagee Letters 2021-07, 2020-46, 2020-40 and 2020-24: https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee