Renting out your home financed with a VA loan is an option. If done by the book, the rental income can be used to offset the existing VA mortgage payment. As a rule, VA loans are not used to purchase income property due to the owner-occupancy rule.
Additionally, can I gross up Social Security income on a VA loan?
Gross Up Income for VA Loans
For a VA loan, a figure of 125% can be used when grossing up income. For example, if a Veteran made $1,000 in Social Security payments, the grossed up income calculator would be $1,250.
Beside above, can tax free income be grossed up on a VA loan?
VA borrowers must have a minimum amount of discretionary income remaining each month after paying major expenses. … VA lenders cannot gross up non-taxable income when calculating your residual income figure.
Do you need tax returns for a VA loan?
The VA needs a record of both in the form of pay stubs, tax returns and Verification of Employment documents. … Alternative documentation consists of one month of the most recent pay stubs, plus the VA loan applicant’s most recent two W-2 tax forms. The lender can alternatively confirm employment status by telephone.
What is Considered Rental Income? You generally must include in your gross income all amounts you receive as rent. Rental income is any payment you receive for the use or occupation of property. You must report rental income for all your properties.
A multi-family home purchase under the VA loan program can be as small as two units or as large as four. However, more units may be possible in cases where a borrower is applying for a home loan with other applicants–ask your participating lender about the circumstances where additional living units may be approved.
Proving Rental Income
In general, lenders review the last two years of your tax returns, including IRS Form 1040, Schedule E, or Rental Real Estate Income and Expenses if using a business tax return. A lender may also require a copy of your lease agreements to verify rental income.
Most VA home loan agreements stipulate that you occupy the house for at least 12 months. At the end of that 12 months, you’ll likely be able to rent the house to a tenant, even if they’re not affiliated with the military.
Since you are already earning a rental income, you are eligible to get a home loan.
This is a reminder that lenders allow borrowers receiving non-taxable income to “gross it up” by 25% for qualifying purposes in most cases.
- Disability insurance payments.
- Life insurance payouts.
- Tax-exempt interest.
- Social security income.
- Child support income.
- Alimony payments.