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What is an FHA Self-Sufficiency Test?
When purchasing a 3-4 unit property using FHA financing, it's crucial that the property can prove its worth. To do this, the appraiser provides an opinion of the fair market value for rental income (including the unit the Borrower will occupy). The monthly value for the rental income must be sufficient to cover the entire monthly payment, including Principal, Interest, Taxes, Insurance, Mortgage Insurance, and FHA Fees.
How is net rental income calculated?
Net rental income is calculated by taking the monthly gross rental income provided by the appraiser and subtracting 25% for vacancy and maintenance factors.
