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Question of the Day

Q:   I’d like to purchase a home and have found a property I like, but I don’t earn enough to qualify for the mortgage I need to finance it.  The roommate with whom I currently share an apartment has indicated an interest in renting a room in the house if I buy it.  Will a lender include the rental payments he would pay as part of my income in determining whether I can qualify for a loan? 

A:  Probably not. Lenders will be concerned not only about the amount of your income but also about its stability.  And most are likely to view a roommate situation as inherently less stable than a more formal rental arrangement, in which a tenant rents a separate dwelling unit in a multi-family building.  Even then, lenders count only a portion of the rental payments in determining the borrower’s ability to qualify for a loan, anticipating that, inevitably, there will be periods when tenants don'’ pay their rent or when the apartment is vacant.  The assumption is that boarders or roommates typically are more transient than tenants, and thus  more likely to move if there is a disagreement or if a more attractive rental opportunity arises.

   If you’re having trouble qualifying for a mortgage, you might consider some other options.  One is to purchase a two- or three-family dwelling and rent the extra unit or units, or purchase a property jointly with someone else.  You might also investigate some of the special financing programs available for first-time buyers. The lower down-payment requirements, below-market rates, and more flexible underwriting standards might help you clear the initial financing hurdle.  Finally, you might consider purchasing a home less expensive than the one you are considering.  While you may not be able to finance the house you want, it is possible you will be able to find a house you can afford.