Need help understanding underwriting rules as it relates to rental property... please help

[NCGirl]

I appreciate any help I can get with this one.

I am building a home and just applied for my mortgage. My middle credit score came in at 715, so no problem there. I earn over 100,000 a year, but I'm self employeed, so they will only take what is on my tax return.

Here's where the problem starts: I own a house in Ohio. But now live in NC. I moved out of that house in Nov. 2012 and have had a renter in the home since Nov. 2012. However, my 2012 taxes don't show much rental income... my 2013 taxes show a full years rental income. The house is on my credit report at $1,030/mth. The rent I receive is $1,025. However, The loan officer has only stated that my gross rent received is $550... which puts me to the negative in rent received at $-617.

I am receiving no income credit for the money my renter pays every month $1,025. But the full liability of $1,030 for the rental property is being added to my liability. 

They are now telling me that I have to sell my car in order to qualify for the loan. Can someone please help me understand why they simply won't add in some, if not all of the money I receive for rent into my income. I don't know what to do here. I'm totally stressed!

Thank you,

[ShanetheMortgageMan]

When rental income is reported on Schedule E of your tax return, that is what counts, and not the current rental agreement you have with your tenant.

If you filed your Schedule E correctly, the "fair rental days" should only be 30-60 in 2012, and should be 365 in 2013.  So they wouldn't average both 2012 & 2013 over 24 months, it'd really just be averaged over 13-14 months.

The rental income you get from the property is calculated against the properties housing payment.  So if after the calculations are done, it shows you are getting $550 and the housing payment is $1,030 then the amount added to your liabilities would be $480/mo ($550 minus $1,030).  If it shows you are getting $1,075/mo then no liability would be added, and instead you'd get an extra $45/mo of income ($1,075 minus $1,030) to qualify with.

What are the expenses (broken down into each category) on your 2013 Schedule E for that property?

[NCGirl]

Thank you so much for responding. My accountant put the "fair Use Days" as 365 on both the 2012 and 2013, but I didn't moved out of the house until Nov. of 2012 so I'm not sure why he did that.

Mortgage company just said they can use my 2014 rents received if I provide the ledger from my property management company and they want to see copies all all checks from 2014. My property management company might take a while pulling these checks and although my tentant paid the rent she sometimes sent two payments in during the month to get to the full amount. Just hoping that won't be a problem.