Qualifying Income
The income a lender actually uses to underwrite a loan after documentation and discounts. For short-term rentals, documentation rules shrink projected revenue. Vacancy discounts cut it further before any of it counts.
Qualifying income is the income figure a lender is willing to count when deciding how much you can borrow, after it applies documentation rules and discounts. Documentation rules and discounts stand between the revenue a property advertises and the figure that counts, especially for short-term rentals, where lenders treat projected gross with caution.
Conventional lenders generally lean on documented income, such as tax returns or a Schedule E showing actual rental history, or on an appraiser’s market rent estimate, rather than optimistic booking projections. Exactly how rental income is counted varies by lender and loan program, so confirm the method before assuming a property’s headline revenue will help you qualify.
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Related terms: Debt-to-Income Ratio (DTI) , Gross Rental Income , DSCR (Debt Service Coverage Ratio)
Last updated . Part of the FinExplained finance glossary .