What percentage of income can be counted from rental property for loan qualification?

When assessing rental income for loan qualification, lenders typically apply a standard guideline that allows them to account for a portion of that income to ensure the borrower's ability to repay the mortgage.

In many cases, lenders will use 75% of the rental income to account for potential vacancies, maintenance costs, and other expenses associated with property management. This conservative approach provides a buffer in the borrower's income calculation, helping maintain a prudent lending environment.

Thus, it's standard in many underwriting processes to recognize 75% of the gross rental income when determining debt-to-income ratios and overall loan eligibility. This practice helps ensure that borrowers are not overestimating their ability to cover monthly mortgage payments based solely on rental income, which can vary significantly.