Can I use Room Mate Income to Qualify for a Mortgage?

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One of the phenomena of the Great Recession is that young people are turning to family members and other young professionals to share housing.

A question that was recently presented to me by a client wanting to buy the SINGLE FAMILY home they have been renting as their primary resident:

“Can I use roommate income to qualify for a mortgage”?

Answer: It Depends

If you are obtaining a conventional mortgage
(Fannie mae or Freddie mac)

Boarder Income

Under most circumstances income from boarders in the borrower’s principal residence or second home is not considered acceptable stable income with the exception of the following:

When a borrower with disabilities receives rental income from a live-in personal assistant, whether or not that individual is a relative of the borrower, the rental payments can be considered as acceptable stable income in an amount up to 30% of the total gross income that is used to qualify the borrower for the mortgage loan. Personal assistants typically are paid by Medicaid Waiver funds and include room and board, from which rental payments are made to the borrower.

Another notable exception is when a borrower is applying for a My Community Mortgage, affordable Financing to Serve Low- to Moderate-Income Borrowers in Raleigh-Cary North Carolina.

My Community Mortgage has an additional exception. The boarder must provide appropriate documentation to demonstrate a history of shared residency (such as a copy of a driver’s license, bill, bank statement, etc., that shows the boarder’s address as being the same as the borrower’s address) and the payment of rental payments for the last 12 months (such as a copy of his or her canceled checks). However, like the first exception, boarder income is limited to 30% of qualifying income can come from boarder income (relatives or nonrelatives).