Qualifying for a Loan When Rental Income is Not Reported on Your Tax Returns

Rental Income







Do you own more than one property?

If you have applied for a traditional mortgage loan in the past 5 years, you may be aware of the technicalities of using income from rental properties to qualify for your new loan.

This can be a challenge for both purchase and refinance transactions.

In the world of Conventional and FHA Mortgages, there are certain guidelines you will need to meet with regard to rental income. This includes providing the lender any requested paperwork to document and support the information you provided on your loan application.

Here are some of the things you can expect to provide your mortgage loan officer for each property you own…

Standard Documentation for Rental Income 

  • Signed rental agreement by all parties
  • Copy of the cancelled check for the security deposit (proving you actually deposited and cashed the check. No funny business here.)
  • Federal Tax Returns including Schedule E
  • Current mortgage statement for existing loan(s)
  • Copies of current hazard insurance policy
  • Copy of homeowner association payments (HOA dues)

When Your Situation Doesn’t Fit the Guidelines

The reality is that some folks simply won’t be able to provide that kind of documentation listed above. This could be due to a number of reasons. Perhaps your situation involves one or of the following:

  • You accept cash payments from your tenants
  • You receive rents from a room, studio, converted garage, or granny unit
  • You receive rental income from a mobile home, trailer, or other unit on your property
  • Your tenants are your family members and you only have verbal agreements in place

If you find yourself in a unique situation where you don’t meet the guidelines for a conventional mortgage, you might have a chance at securing a loan through a private money lender.

As long as you have enough equity in your property, you will not need to provide as much documentation as a traditional mortgage bank or credit union.

Since every loan is reviewed on a case-by-case basis, it is the individual (private) lender’s decision as to what kind of information or paperwork you need to provide.

Here are some examples.

Other Ways to Document Your Rental Income

  • Cash receipts
  • Money order receipts
  • Copies of your bank statements to show deposits
  • Create a new lease agreement in writing so you can now document the current and future terms of your agreement

There might also be other ways to document your rental income to qualify for your loan. Depending on the details of your specific loan request, you may not even have to document any rental income at all.

This is one of the reason private money loans are so flexible.

To learn more about using private money for your unique situation, just send us a confidential question in the Ask a Question page.

Click Here to Ask a Question >> PrivateMoneyBlog.com/question

Or you can submit a detailed loan scenario here >> PrivateMoneyBlog.com/apply


Note: This is for informational purposes only as it relates to obtaining a real estate loan through a private individual.  This information does not constitute a commitment to make or arrange any loan. We are not attorneys, accountants, nor the IRS. So if you would like information on how and why to properly report your rental income, please consult with a qualified professional. You can also visit the IRS website at www.irs.gov .


  1. Reply

    I simply want to tell you that I’m beginner to weblog and absolutely loved your web page. Almost certainly I’m going to bookmark your site . You actually have fabulous article content. Thanks a lot for revealing your blog.

Leave Comment

Your email address will not be published. Required fields are marked *