Verifying Rental Income
 The following is required to verify all rental income :

1. Schedule E of IRS Form 1040. Depreciation may be added back to the net income  or loss shown on Schedule E. Positive rental income is considered gross income  for qualifying purposes; negative rental income  must be treated as a recurring liability. The lender must be certain that the borrower still owns each property listed, by comparing the Schedule E with the real estate owned section of the residential loan application. (If the borrower in the same general area owns six or more units, a map disclosing the locations must be submitted evidencing compliance with FHA's seven-unit limitation. )

2. Current Leases. If a property was acquired since the last income  tax filing and is not shown on Schedule E, a current signed lease or other rental agreement must be provided. The gross rental amount must be reduced for vacancies and maintenance, before subtracting PITI and any homeowners' association dues, etc., and applying the remainder to income (or recurring debts, if negative).Vacancy factors have been developed by HOC jurisdiction:

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