How to Qualify Rental Income Is this file high ratio or conventional? If High Ratio Subject: Add 50% of gross rents to income Qualify on P&I Remove T&H if sent to CMHC Other Property: Rental Calculator Look at how you qualify the customer: If Conventional 1. Net Rents Calculator -Subject property: -50% gross rents add to income -Qualify only on P&I -Other Properties: -Surplus: Add to ‘Other Income’ -Shortfall: Add to ‘Other Liabilities’ -Remove property from ‘Other properties and input property info in ‘Other Assets’ 2. 80% rental offset for all properties on 5 yr fixed deals ONLY -Applies to all properties (subject property and other properties) HOT TIP! -80% rental offset typically works better for customers with more debt -The Net Rents worksheet typically works better for customers with less debt NOTES!! Ensure you put in your notes explaining how you have qualified rental income. Genworth allows: Illegal suites Opinion of rents from appraiser/Letter of economic rents Age restricted properties Scenario: Subject Owner-Occupied Purchase + Rentals For all products: Rental calculator for other properties High Ratio Scenario: Owner-Occupied Rental + Rentals 5 & 3 yr fixed: 50% gross rents add to income ARM’s: 50% gross rents add to income Take out T+H Scenario: Non Owner-Occupied Rental + Rentals Conventional 5 yr fixed: 80% rental offset on all properties All other products: 50% for subject + rental calculator Scenario: Owner-Occupied Rental + Rentals 5 yr fixed: 80% rental offset on all properties All other products: 50% subject + rental calculator *Insurer allocation may depend on product and program. Good to Know’s before you send in a Rental Is this a rental refinance? Prepare your client that they may be asked to send in an appraisal. We have been seeing over valued refinances come in lately and insurers have been asking for more appraisals Is your deal in your client’s holding company name? Make the Holding company the primary applicant and your client the secondary applicant. What should be in your notes? Make sure you put in your notes how you qualified the rental income and state that you have sent your rental spreadsheet to [email protected] Let us know whether your rental suites are legal or not Let us know what product you’re looking for MERIX FINANCIAL PARTNERING FOR SUCCESS This email and all attachments transmitted with it are intended solely for the use of the addressee and may contain legally privileged and confidential information. If the reader of this message is not the intended recipient, or an employee or agent responsible for delivering the message to the intended recipient, you are hereby notified that any dissemination, distribution, copying or other use of this message or its attachments is strictly prohibited. If you have received this message in error, please notify the sender immediately by replying to this message and please delete it from your computer.
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