1. What is the Fannie Mae Rental Income Calculator?

The Fannie Mae Rental Income Calculator estimates monthly rental income by multiplying the monthly rent amount by the property's occupancy rate. This calculation follows Fannie Mae guidelines for underwriting rental properties.

2. How Does the Calculator Work?

The calculator uses the Fannie Mae rental income formula:

Where:

• \( Rent \) — Monthly rental amount in dollars
• \( Occupancy\_Rate \) — Expected occupancy rate as a decimal (0 to 1)

Explanation: This simple multiplication provides the expected monthly rental income based on the property's rental rate and occupancy percentage.

3. Importance of Rental Income Calculation

Details: Accurate rental income estimation is crucial for mortgage underwriting, property valuation, investment analysis, and determining debt service coverage ratios for rental properties.

4. Using the Calculator

Tips: Enter the monthly rent amount in dollars and the expected occupancy rate as a decimal between 0 and 1 (e.g., 0.95 for 95% occupancy).

5. Frequently Asked Questions (FAQ)

Q1: What occupancy rate does Fannie Mae typically use?
A: Fannie Mae typically uses 75% occupancy rate for rental income calculations unless documented otherwise with rental history.

Q2: How is rental income treated in mortgage applications?
A: Rental income can be used to qualify for mortgages on investment properties, but lenders typically apply vacancy and maintenance factors.

Q3: What documentation is required for rental income?
A: Typically requires lease agreements, tax returns, and sometimes bank statements showing rental deposits.

Q4: Are there different calculations for multi-unit properties?
A: Yes, multi-unit properties may use different calculations that account for varying rental rates and occupancy across units.

Q5: How does vacancy factor affect the calculation?
A: The occupancy rate already accounts for vacancy. A 95% occupancy rate means 5% vacancy is factored into the income calculation.