Quicken Loans and vacation rental company Vrbo are partnering to allow prospective buyers to use rental income on primary or secondary homes to qualify for a mortgage.
Despite rental income often accounting for a large portion of an individual’s revenue stream, in the past that individual could not use that income to qualify for a mortgage or refinance if the property was a short-term rental of their primary or secondary home. Previously, only rental income on investment properties was eligible to be considered.
“Vrbo helps homeowners use one of their biggest assets as a source of income,” Quicken Loans CEO Jay Farner said in a statement. “Now, Quicken Loans can accurately review that income and consider it when calculating the debt-to-income ratio – a major data point considers when qualifying for a mortgage.”
Through the partnership, individuals can use their short-term rental income earned through Vrbo to qualify for mortgages for primary residences, vacation homes and investment properties.
Income from Vrbo – a subsidiary of HomeAway which is part of Expedia Group’s portfolio of brands – is recorded in real time, so individuals can share earnings statements directly with their Quicken Loans mortgage banker.
Rental income and mortgage payments are often intertwined. A June 2018 market report from Vrbo found that more than 50 percent of short-term rental owners utilizing the platform use income generated from their property to cover at least 75 percent of their mortgage payment.
“Homeowners who list their vacation homes on our marketplace have a unique financial opportunity to earn extra income,” Bill Furlong, vice president of HomeAway, Americas, said in a statement. “For the first time ever, homeowners can use their Vrbo rental income to be considered for a mortgage refinance, unlocking more value and financial returns on their property investments.”