Boarder income

Boarder income is rental income collected from individuals residing in the borrower's primary residence. Eligibility, income caps, documentation requirements, and payment history standards vary by program — but a 30% cap and shared residency proof are universal across all programs.

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Guideline Requirements — Fannie Mae Standard Conventional

Boarder income from a principal residence or second home is generally not considered acceptable stable income under standard Fannie Mae guidelines. Two narrow exceptions apply Fannie Mae:

• Exception 1 — Borrower with disabilities: "When a borrower with disabilities receives rental income from a live-in personal assistant... the rental payments can be considered as acceptable stable income in an amount up to 30% of the total gross income that is used to qualify the borrower for the mortgage loan." Fannie Mae
• Exception 2 — HomeReady: "The HomeReady mortgage eligibility requirements include an additional exception. See Chapter B5-6, HomeReady Mortgage." Fannie Mae

Documentation requirements (when eligible) Fannie Mae:

• Boarder's history of shared residency: driver's license, bills, bank statements, or W-2 forms showing same address as borrower
• Receipt of income for the most recent 12 months via bank statements, cancelled checks, or evidence of electronic payment
• Income history must demonstrate full, regular, and timely payments
• Lenders are not required to verify continuance unless there is reason to believe income will stop

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Guideline Requirements — FHA (per Mortgagee Letter 2025-04)

Eligibility JMAC Lending:

• Boarder income cannot exceed 30% of the borrower's total monthly effective income
• Must document at least 9 of the most recent 12 months of rent receipts via tax returns, bank statements, or cancelled checks

Income calculation :

• "The Mortgagee must calculate Rental Income from Boarders by using the lesser of: the 12-month average; or the current rent as documented in the written agreement."
• "Where Rental Income from Boarders has been documented for at least nine of the last 12 months, the Mortgagee must average the Rental Income over a 12-month period."

Required documentation JMAC Lending:

• Evidence that the boarder's address is the same as the borrower's address
• A copy of the executed written agreement documenting the boarding terms
• The boarder's intent to continue boarding with the borrower

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Lender Overlays / Matrix — Fannie Mae HomeReady

Nations Direct (HomeReady):

• "The rental payments that any borrower receives from one or more individuals who reside with the borrower (who may or may not be related to the borrower) may be considered as acceptable stable income. This applies for a one-unit property in an amount up to 30% of the total gross income that is used to qualify the borrower for the mortgage if the boarder:
  • is not obligated on the mortgage loan and does not have an ownership interest in the property
  • has lived with the borrower for the last 12 months
  • can provide appropriate documentation to demonstrate a history of shared residency (such as a copy of a driver's license, bill, or bank statement that shows the boarder's address as being the same as the borrower's address); and
  • can demonstrate the payment of rental payments (such as with copies of canceled checks) to the borrower for the last 12 months, or at least 9 of the most recent 12 months provided the rental income is averaged over a 12-month period.
  • Payment of rent by the boarder directly to a third party is not acceptable."

New Wave Lending (HomeReady) — partial payment history calculation :

• "if only partial payments are verified (at least 9 months), income will be multiplied by verified months then divided by 12 (i.e. $500 cancelled checks of 9 months — $500 * 9 / 12 = $375)"

JMAC Lending (HomeReady) — AUS entry and documentation condition JMAC Lending:

• "The amount used to qualify must be entered as 'Boarder Income'. If the field is not available on the AUS enter as 'other' income. DU will drop the standard conditions and findings for the type of income selected." JMAC Lending
• "NOTE: If any of the required documentation cannot be provided, the income may not be used as qualifying income and may only be considered as a compensating factor." JMAC Lending

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Lender Overlays / Matrix — Freddie Mac Home Possible

Forward Lending (Home Possible) :

• "Boarder Income from a 1-unit primary residence:
  • Up to 30% of qualifying income is allowed
  • Occupant (related or unrelated) must reside in the property and not be on title or the mortgage
  • Occupant may not be the borrower's spouse or domestic partner
  • Proof of shared residency for prior 12 months (e.g. ID, utility bill, bank statement) is required
  • Documented rent payment history paid directly to the borrower for 12 months, or 9 of last 12 months (12-month average) to be provided. Rent paid to a third party is ineligible
  • Borrower statement affirming the source of rental income, how long the rental income has been received, and that it intends to continue residing at the new residence for the foreseeable future is required"

JMAC Lending (Home Possible) — eligible property types and AUS entry JMAC Lending:

• Eligible for SFR, SFR with ADU, condos, and PUDs
• "Boarder income (relatives or non-relatives) for Home Possible products is permitted as qualifying income if the eligibility guidelines are met... Boarders may not be obligated to the Note." JMAC Lending
• "The amount used to qualify must be entered as 'Boarder Income'. If the field is not available on the AUS enter as 'other' income. LPA will drop the standard conditions and findings for the type of income selected." JMAC Lending

Nations Direct (RefiPossible / Freddie Mac) — borrower affirmation requirement Nations Direct:

• "The Mortgage file must contain a written statement in the form of a signed letter or e-mail directly from the Borrower affirming: the source of the rental income [and] the fact that the person providing the rental income has resided [with the borrower]." Nations Direct

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Quick-Reference Program Comparison

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Key Rules Consistent Across All Programs

• 30% cap: Boarder income cannot exceed 30% of total qualifying income under any program
• Shared residency proof: Driver's license, bill, bank statement, or W-2 showing matching addresses is always required
• Direct payment only: Rent paid by the boarder to any third party is ineligible across all programs
• Boarder not on the note: The boarder cannot be obligated on the mortgage loan under any program
• 12-month history preferred; 9-of-12 acceptable: When only 9 months are documented, income must be averaged over a full 12-month period
• AUS entry: Input as "Boarder Income" in DU/LPA; if unavailable, enter as "Other" income so the system issues the correct conditions