Does Rental or Other Nontraditional Income Count Toward Mortgage Qualifying?
Generally yes, when it's documented. Rental income usually needs to show on your tax returns or be backed by a signed lease, and lenders count an adjusted figure, not the full rent. Social Security, pensions, part-time work and self-employment can count too, with the right paperwork. Income you can't document generally can't be used.
Last updated September 29, 2026How does rental income count?
Lenders want proof: usually the rent reported on your tax returns (Schedule E), and often a signed lease. Under Fannie Mae's guidelines, if you're using a lease, the lender generally counts 75% of the gross rent, allowing for vacancies and upkeep. If it's using your tax returns, it starts from the net rental income on Schedule E and adds back non-cash items like depreciation. Either way, the property's own payment is then subtracted.
Can I keep my current home as a rental and buy a new one?
Often, but the rules differ by loan type:
It depends on your situation:
- FHA: to count rent from the home you're leaving, FHA generally requires at least 25% equity in it, and has its own occupancy and documentation rules.
- Conventional (Fannie Mae): rent from your departing home can generally count with documentation, like a signed lease and proof of the deposit. Other requirements depend on your history as a landlord.
- Not enough documentation yet: the lender may count the full payment on the old home without any offsetting rent.
Do Social Security, pension, part-time or self-employment income count?
Generally yes, with documentation such as an award letter, tax returns or pay stubs. Part-time or second-job income usually needs about a two-year history, while a full-time job can count much sooner.
What about DSCR loans and short-term rentals?
DSCR (debt service coverage ratio) loans work differently. Instead of your personal income, they qualify on the rent the property can bring in. Most use a long-term market rent from the appraisal and don't count Airbnb or VRBO income. Some programs built for short-term rentals qualify on the property's projected short-term rental income instead, so it depends on the program.
| Rental income, standard loans | Shown on tax returns or backed by a lease |
|---|---|
| Rent with a lease (Fannie Mae) | 75% of gross rent is used |
| Rental income, DSCR loans | The property's market rent supports the payment |
| Short-term rental income | Using a short-term rental DSCR program |
| Social Security or pension | Documented and expected to continue |
| Part-time work | About two years of history |
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Sources
- https://selling-guide.fanniemae.com/sel/b3-3.8-01/rental-income
- https://www.fhanewsblog.com/article-update-using-rental-income-to-qualify-for-an-fha-home-loan
- https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-17hsgml.pdf
- https://www.iqratemortgages.com/blog/qualify-for-a-california-dscr-loan-with-market-rent
- https://www.closehomefast.com/blog-dscr-loans-investor-guide.html
- https://www.lendmire.com/how-rental-income-is-calculated-for-dscr-loans
- https://www.ridgestreetcap.com/blog/dscr-loan-for-airbnb
- https://www.loanguys.com/blog/dscr-loan-short-term-rentals-qualifying-with-airbnb-vrbo-income
- https://trussfinancialgroup.com/blog/how-lenders-are-using-airdna-to-assess-rental-income-instead-of-traditional-1004-appraisals
- https://selling-guide.fanniemae.com/sel/b3-3.6-05/income-or-loss-reported-irs-form-1040-schedule-e
- https://guide.freddiemac.com/ci/okcsFattach/get/1001351_4
- https://www.fhaloans.com/articles/fha-loan-occupancy-requirements
- https://www.linkedin.com/pulse/40001-guidance-vacating-primary-residence-obtaining-new-kelly-smith
- https://singlefamily.fanniemae.com/originating-underwriting/loan-quality/quality-insider/august-2025
- https://homeloanartist.com/move-up-buyers-converting-primary-to-rental-income
- https://selling-guide.fanniemae.com/sel/b3-3.4-15/social-security-income
- https://mutualreverse.com/wp-content/uploads/2023/10/FA-Income-Documentation_Guide.pdf
- https://themortgagereports.com/19758/use-part-time-job-income-to-qualify-for-a-home-loan
- https://www.mortgageresearch.com/articles/part-time-seasonal-second-job-income-mortgage-qualification
- https://selling-guide.fanniemae.com/sel/b3-3.3-08/seasonal-income
Sourced from licensed loan officers and brokers in the FreeRateUpdate network.
Educational information only, not individualized financial or legal advice. Program details and rates change; verify current terms with a licensed loan officer before making a decision.