Rental Income
Schedule E rental income and new leases — per-property analysis, the 75% market-rent rule, and PITIA offsets handled agency-by-agency.
Rental income calculations vary sharply by property type, occupancy, and program. Non-owner-occupied rentals typically use the 75% market-rent rule when no history exists; owner-occupied units often net rent against PITIA. Schedule E income needs depreciation and mortgage interest add-backs, and each property deserves its own line.
IncomeCalculator.com reads Schedule E, lease agreements, appraisal Form 1007, and mortgage statements together, applies the correct occupancy and program rules, and returns a monthly rental income figure — positive or negative — with the math shown for each property.
What to upload
- Personal tax returns (Form 1040) with Schedule E
- Current lease agreements for each rental property
- Appraisal Form 1007 (single-unit market rent) or 1025 (2-4 unit) when required
- Mortgage statements for each rental property
How the calculation works
Classify each property
Each rental is identified per property from the Schedule E columns — or from a lease when the property is newly acquired — and matched to its own mortgage statement.
Apply the right rental income rule
For properties with history, Schedule E income is restored with depreciation and mortgage interest add-backs. For properties without history, the 75% market-rent rule applies. Owner-occupied 2-4 units use net rent against PITIA.
Roll up to monthly qualifying income
Each property produces a positive or negative monthly figure, and all properties are combined into the borrower's total rental income — with vacancy and seasonal adjustments where appropriate.
Supported programs
Conventional, FHA, VA, USDA, and Non-QM. DSCR loans use rental income differently and are handled through the DSCR path when applicable.
Common questions
When is the 75% market-rent rule applied?
For non-owner-occupied rentals without a Schedule E history — typically new acquisitions — 75% of the market rent from the appraisal (Form 1007 or 1025) is used. The remaining 25% covers vacancy and expenses.
How is Schedule E rental income calculated?
Net rental income or loss is restored with depreciation, mortgage interest, insurance, and tax add-backs to reflect true cash flow, then averaged across the reporting period.
What about owner-occupied 2-4 unit properties?
Rental income from the non-owner-occupied units is netted against the property's PITIA. A positive result adds to qualifying income; a negative result increases the housing expense.
What about a newly purchased rental with no Schedule E yet?
A signed lease — supported by the appraisal's market rent when available — prices the property at 75% of rent less the documented payment, the standard new-acquisition convention.