03/07/2025
In conjunction with FHA ML 2025-04, Pennymac will allow rental income from boarders to qualify for an FHA-insured mortgage, subject to the requirements outlined below. This update is effective for FHA case numbers assigned on or after 3/14/2025.
Eligibility:
- Rental income from boarders can be considered effective income, subject to the following:
- The occupying borrower has a 12-month history of receiving such income and is currently receiving it.
- The boarder income does not exceed 15% of total monthly effective income
- Minimum 680 FICO score for occupying borrowers
- Ineligible for manually underwritten loans.
Documentation Requirements:
Evidence of rental history over the previous 12 months, validated as follows:
- A copy of the executed written agreement documenting the boarding terms and the boarder’s intent to continue boarding with the borrower; and
- Bank statements; or
- Canceled checks
- Note: Tax returns and deposit slips are not eligible for validation purposes.
- Evidence that the boarder’s address is the same as the borrower’s address.
Calculation of Effective Income:
- Use the lesser of the 12-month average or the current rent documented in the written lease agreement.
- Where rental income from Boarders has been documented for at least 9 of the last 12 months, the rental income must be averaged over a 12-month period.
Please contact your Sales Representative with any questions.