FHA Announces Revisions to Policies for Rental Income from Boarders

FHA recently published ML 2025-04, which permits Mortgagees to consider rental income from existing boarders if the occupying borrower has a 12-month history of receiving such income.

Among other matters, ML 2025-04 requires Mortgagees to verify and document such rental income through the Borrower’s tax returns, bank statements, canceled checks or deposit slips showing rental payments received.  Rental income from boarders may not exceed 30% of the borrower’s total monthly effective income and a copy of the executed written agreement documenting the boarding terms is also required. 

Mortgagees may choose to implement ML 2025-04 immediately but must implement its provisions for FHA case numbers assigned on or after March 14, 2025.