If Your Roommate Pays Rent Could That Be Your Path To Homeownership

Mortgage rates finally catch a break and slide back into the mid to low 6s, giving buyers and refinance clients more room to breathe. We also unpack an FHA change for 2026 that could let roommate rent help more people qualify for a home. 

• mortgage rate movement and what’s driving it 
• what “boarder income” means for FHA loans 
• how FHA rules differ from Fannie Mae HomeReady and Freddie Mac 
• the nine-month boarder income requirement and 12-month rental history rule 

Planning ahead with a loan officer to track payments early 
Reach out to Nikki if you have questions. 

Transcript

SPEAKER_00 0:37

All right, everybody. Welcome to the Monday market update. It is March 30th. Hey, Nikki. Yes, hey everyone. How are you doing?

New FHA Rule On Border Income

Real World Scenarios And Proof Tips

SPEAKER_02 0:45

So we've got some really good positive movement in the market. So that's good. As you can see, right here, this little green line, this is the mortgage interest rates going up, up, up, up, up, up. And finally, we're getting a break with mortgage interest rates going back down. You can see that's quite a significant break here to bring us back into the mid to low sixes, which is really good news, especially for clients right now who are waiting to refinance or clients who are looking for lower interest rates when they are ready to purchase. So that is really great news. This is as a result of the peace talks that have been happening with the with Iran and what all the situation that's kind of like settling down over in the Middle East. We still, you know, obviously are affected by oil prices right now. Mortgage interest rates are still going to be affected by that, but it's good to see this movement in the market. And I can't tell you how excited I am to finally see it start to come back down. Hopefully, this trend will continue as the conflict kind of settles down and we can keep the market going and get back down into those high five. So fingers crossed for sure on that. I wanted to bring up some FHA changes that happened for 2026 that are going to be helpful in qualifying clients for their first home purchase or any subsequent home purchase. So what I want to focus on today is what's called border income. So border, a border is somebody who lives with you in a single property and pays you rent. So it this can happen when you already own a property and you have a roommate. This can happen when you're renting a place, have a lease that has your name on it, and the and you have a roommate that is paying a portion of the rent. Now, on the conventional side, Fannie Mae does allow the use of border income as long as you qualify for the income-based program called Home Ready. The income-based program called Home Ready has an income limit to it of about$102,000 a year. So as long as you make under$102,000, counting your normal salary and the rent you receive from your roommate, you can use that border income. That's the only program. Freddie does not allow it unless you have a live-in-aid or unless you have an accessory dwelling unit. So an accessory dwelling unit would be like a casita. Then they allow it. It has to be a separate residence for FHA. Even though it's considered a single unit property, the accessory dwelling unit is allowed for for Freddie. Well, FHA just announced that they are going to now allow border income for people who are in these situations where they're renting an apartment, let's just say, and they have a roommate, or they're renting a house and they have a roommate, or they already own the property and have a roommate. The interesting thing about it is on the conventional side, you need to show that you have a border in your home for at least 12 months and has made 12 payments to you in order to use that income. On FHA, they said we only need to see that for nine months. However, you need to have rented a place or have any rental history for at least 12 months. So in other words, of the nine of those 12 months have to be, have to show that you have border income. And the person that you have as a roommate has to write a letter basically stating that they are going to continue to live with you in the new property so that we can use that income. The other limitation on it is that amount of income can only be up to 30% of the overall qualifying income for your home that you're going to be purchasing. So it can't be like, oh, you can't say, oh yeah, I've, you know, I'm receiving$3,000 a month and only make$3,000 a month. That's not allowed. But we can use a certain portion of that income that you're going to be receiving from the border, up to 30% of your overall total qualifying income. So just some rules and regulations, but it's a nice change because a lot of people that are in rental situations have roommates and want to purchase. And this allows us to use that income that they've been receiving. So there are a little bit of, you know, nuances with how to prove that, you know, they've been paying you for the rent. If they, you know, maybe they pay the management company directly, that's totally fine too. But it has to be a situation where you have had a roommate for at least nine months. They are making a portion of the payment, and we can use that amount to apply to the new mortgage. So really cool opportunity there for some people who are in a particular situation.

SPEAKER_00 5:00

Yeah, that is. And I'm just sitting back, I'm like, I wonder how they come up with this stuff.

SPEAKER_02 5:12

Yeah. So, like, if you really think about it, one really good opportunity is let's say you have a couple that's unmarried and one of them they want to buy a house together, but one of them has really crappy credit and one of them has really good credit. This is a way to use some income to help qualify for a home when they are not married and they are both sharing in the payment of the rent. So it's kind of nice. So those are that's a very kind of specific situation, but it's also actually a very common situation, especially for first-time homebuyers who aren't married and, you know, maybe have kids together or whatever. They just aren't married and they can they can use that border income to help qualify for the for the mortgage, which is really nice. And of course, as an agent, it's one of those things where it's like get get them to the loan officer early so they can start tracking those payments so that in nine months they're ready to go, or 12 months or whatever that is, if they're not already ready and just don't know it.

SPEAKER_00 6:05

It makes sense because I know before you're like, can we use the income? How does that look? And it just gives you another layer to be able to get more people into homeownership. So it's awesome. Exactly.

SPEAKER_02 6:15

Yeah, it's really cool. So yeah, yeah, really good news from that standpoint.

SPEAKER_00 6:20

Absolutely. So both both uh rates are going the headed the right direction, and this is this is good, especially with the spring market coming. So I know, I know it's been so stressful watching the rates just go well, and I'm thinking of this particular couple that's exactly in the situation you just described. Can they go back in time and somehow prove that the payments have been made? Or contract?

How To Reach Nikki

SPEAKER_02 6:49

No, it does not need to be a contract, they just need to show that they've been able to make that they've been paying. So whether they do tra let's say they do transfers to the leaseholder, let's say they pay the management, their portion of the management company directly. Let's say, you know, so it just shows that you know you've been receiving that income for to help make those payments. Okay. So in those two circumstances, or if they pay the roommate, you know, for the Venmo them, or maybe they write them a check, or maybe they transfer money to their account, or maybe they, you know, pay one month and the roommate pays the other month, you know, or whatever they do. Yeah. You know, we just have to kind of work through the details. And yeah, it can be historical. Like I said, there's people that could already qualify that don't even know. Yeah.

SPEAKER_00 7:32

So reach out to Nikki if you have questions. So once more, how do they get a hold of you, Nikki?

SPEAKER_02 7:38

Uh, they can reach me via text or phone at 952-484-1584. You can find me on Instagram, Facebook, and TikTok at mortgages from Mn to A Z.

SPEAKER_00 7:49

And you can also email me at Nikki at Kevnik Group.com. Awesome. Well, thank you so much. That has my wheels spinning. And I hope you're listening to this or watching it on YouTube. Your wheels are spinning because let's reach back out to those buyers, people that may not think or wondering about if they would qualify. This just gives a whole other opportunity. So, as always, Nikki, appreciate you and all your information.

SPEAKER_02 8:15

Absolutely.

SPEAKER_00 8:16

All right, everyone, have a great day, and we'll see you next week. Bye. Bye.