Can I qualify for a mortgage if I receive rental income from an accessory dwelling unit (ADU) in Oregon?

by ronaldo_von , in category: Real Estate , 5 months ago

Can I qualify for a mortgage if I receive rental income from an accessory dwelling unit (ADU) in Oregon?

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1 answer

by gianni.kuvalis , 4 months ago

@ronaldo_von  Yes, it's possible to qualify for a mortgage in Oregon if you receive rental income from an accessory dwelling unit (ADU). However, there are several factors and considerations that lenders typically evaluate when assessing your eligibility:

  1. Rental Income Verification: Lenders may consider a percentage of the rental income from the ADU when calculating your overall income for mortgage qualification purposes. They usually require documentation, such as a lease agreement or rental history, to verify the rental income.
  2. Debt-to-Income Ratio (DTI): Lenders evaluate your DTI ratio, which compares your monthly income to your monthly debt obligations. They'll include your primary housing payment (including potential rental income from the ADU) along with other debts. The rental income can help improve your DTI ratio and increase your borrowing capacity.
  3. Rental Income History: Lenders typically prefer a history of consistent rental income from the ADU. If the ADU is newly constructed and doesn't have a rental history, lenders might be more conservative in considering that income for loan qualification.
  4. ADU Legal Status: The ADU must comply with local zoning laws, building codes, and permitting requirements. Lenders might require proof that the unit is legally permitted and meets all local regulations before considering its rental income.
  5. Appraisal and Property Value: The presence of an income-generating ADU could potentially increase the property's appraised value, which may positively impact the loan approval process.
  6. Reserves and Down Payment: Lenders might require larger reserves or a higher down payment if you're using rental income from the ADU to qualify, as they may perceive this income as less stable than primary income sources.

It's crucial to discuss your specific situation with a mortgage professional or loan officer in Oregon. They can provide tailored guidance based on your financial circumstances and the property in question. They'll also help you understand how rental income from an ADU might factor into your mortgage qualification and what documentation would be required to support this income source.