Gross Income Allowance

When residential rental income-producing properties are involved, the gross income allowance is the calculation of gross income for qualification purposes. Most residential loans allow 75% of the rental income from the subject property's apartment unit to be added to the applicant's gross income. For example, if you are earning $3,000 per month and you wish to buy a two-flat with rental income from one rental unit (assuming you will live in the other unit) of $800 per month, you will use a gross monthly income of $3,600 ($3,000 plus 75% of gross rental) for debt-to-income qualification purposes. For more information, see the "Analyzing Employment and Income" article in the "Loan Process" section.

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