o. Rental Income (continued)

Verification:  Rental of Other Property Not Securing the VA Loan

Obtain

·   documentation of cash reserves totaling at least 3 months mortgage payments (principal, interest, taxes, and insurance - PITI), and

·   individual income tax returns, signed and dated, plus all applicable schedules for the previous 2 years, which show rental income generated by the property.

Analysis:  Rental of Other Property Not Securing the VA Loan

Rental income verified as stable and reliable may be included in effective income.

If there is little or no prior rental history on the property, make a determination based on review of

·   documentation of the applicant’s prior experience managing rental units or other background involving both property maintenance and rental

·   any leases on the property, and

·   the strength of the local rental market.

Property depreciation claimed as a deduction on the tax returns may be included in effective income.