My boyfriend and I are thinking about getting a house. His credit score is bad but mine is good, so I want to try borrowing on my income/credit alone. Since he will be living in the house with me, and paying "rent", can I use his future rent payments to get a bigger mortgage? If so, will I have to claim his "rent" payments to me as income for tax purposes? I thought about doing a stated income loan for this, but I don't have the income yet and I don't want to get into anything shady.
2007-01-02 20:05:35 · 5 answers · asked by bug m 2 in Business & Finance ➔ Renting & Real Estate
What you are proposing is "Room Rent" and is not counted when qualifying. And yes, legally if you charge rent, you should declare it for tax purposes. If you don't that's more shady than using a stated income loan and giving yourself credit for Room Rent. Unusual situations like yours is exactly why stated income programs are necessary.
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2007-01-03 14:48:52 · answer #1 · answered by Anonymous · 1⤊ 0⤋
It depends on the type of house you buy. If you are buying a Single-Family Residence, then no. This income would be considered border income and not allowable.
There are exceptions to every rule however. I remember hearing of a lender accepting border income but I'm sure a hefty down payment was required.
If you are buying a duplex you may be able to get away with it. You can rent the other unit out to him. If you draw up a lease for your b/f most banks will use the future rent as income, but only 75% of it. They assume you use 25% to invest back into the property.
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2007-01-03 07:25:12 · answer #2 · answered by Kevin B 3 · 0⤊ 0⤋
No, the bank won't look at it that way. Just buy whatever you can swing based on your income alone.
There's another "hidden" benefit to consider, based on personal experience. Since you are buying what you can afford on your own income and the house will be in your name alone, should you and your b/f split up there won't be any issues on who owns the house or who has to move.
When my ex g/f and I split up, the house was in my name alone because the loan company would not do the loan jointly because of her credit. It made that part of the breakup a non-issue.
2007-01-03 04:36:56 · answer #3 · answered by Bostonian In MO 7 · 0⤊ 0⤋
i get ..ap. 25% if needed ..from some banks (not to drop a name but Bank of America).. not on a boyfriend..(which can be flaky)..but on the fact that I would be taking in a room mate..(not a future income but as I would be taking in a border/room mate)
so the income is....eg.the bank says $1000 per month..I could go to $1250..(or from say $100k to $125k depends but the per month on $125K is only ap. $25 on the mortgage) with the income from an extra room..in a room mate situation can be flaky and you have to cover that amount if someone leaves ..in itself..(a room mate could easily rent a truck and strip your home and insurance won't cover it)....it is only 25%..(not much).
up to you..worst you would hear from the bank is "no"..
it does not change your resale status as you lived in the house and brought in a room mate..
to be safe I declare all the income......but then claim expenses..
it isn't hard to do. and once you do show this income the bank sees this on taxes and after 2 years of taxes showing this..it is income..(first 2 years is hard).
2007-01-03 08:14:25 · answer #4 · answered by m2 5 · 0⤊ 0⤋
No. you cant do that, it's not income, so that would be tax fraud, and admitting you will live there with someone who has bad credit will make yours worse.
2007-01-03 04:15:18 · answer #5 · answered by bellatrix27 3 · 2⤊ 0⤋