How to Buy a Home with your Roommate

Fannie Mae’s HomeReady mortgage allows a home buyer to qualify using “boarder income”.  What does this mean? Remember our favorite roommates Laverne and Shirley?

Let’s say Laverne and Shirley both have their long time jobs at the beer factory and Laverne is pulling in extra money as a waitress but her credit scores are less than ideal for a mortgage right now. Shirley decides she would really like to buy a house and they both want to continue living together.

With the HomeReady program, Shirley can buy a house and use the “boarder income” from Laverne as income for qualifying. Here’s the scoop:

  • Boarder (Laverne) must have lived with the borrower (Shirley) and paid rent directly to the borrower for the last 12 months. NOTE: the rent cannot be in cash – it needs to be a check that can be documented.
  • Up to 30% of the rental income from the boarder may be used for qualifying
  • Borrower must provide documentation of the rental income paid by the boarder for at least 9 of the last 12 months. Rental income will be averaged over the last 12 months.
  • Boarder will need to show documentation that they lived with the borrower (photo id, utility bills, etc.).
  • The boarder may not be related to the borrower.
  • The boarder’s rent checks may not have been written to a third party.

So if Laverne writes Shirley a check for her portion of the rent over the last 12 months, a lender would look at the last 12 months checks from Lavern and average it over 12 months. So if Laverne only has ten cancelled rent checks, a lender would still average this over 12 months (12 months checks is probably going to be the most ideal).  A lender will then take 30% of that average and can use that for income for Shirley to qualify for buying a home.

Laverne, of course, has to live in the new home with Shirley and continue to be a roommate. Laverne would not be obligated to the mortgage nor the title/deed of the property.

HomeReady offers reduced down payment, lower mortgage rates and private mortgage insurance premiums for borrowers with better credit scores and offers flexible underwriting guidelines, such as allowing boarder income. HomeReady is not limited to first time home buyers. Income limits do apply in some areas.

For more information on Fannie Mae HomeReady or any mortgage program for homes located in Washington state, please contact me!


  1. can you help me? I need some direction. I bought a home a year ago in June 16 months to be exact. I had a realitor and there was a realitor for the seller. I used a bank that is not selling my loan and I went through a special program through the city.So 4 parties involved here. The MLS sheet on my home had taxes listed at 2350.00 homestead per year. I just received an escrow statement saying I owe an additional 935.00 and that my payment was jumping from 818.18 to 1050.00 starting in December. I qualified for this program based on my income to pay the 818.00 now I will have to sign up for food stamps to feed my daughter and I in order to pay this higher mortgage. I cant believe that no one checked the taxes on this home. I feel deceived and betrayed and that my decision to purchase the home was stripped from me.Through my on line search, im finding this to be a common fraud horror. I aslo spoke to the city assessors office who said we get calls like this every day!!! Do I have the right to sue for failure to disclose correct information ??

    • Theresa, property taxes change and adjust typically annually. In King County, we receive statements from the county with how much the assessed value has changed. The value for the property and/or the improvements (the home) may go up or down. How much we pay in property taxes will depend on what the value of the home is. Levies or new legislation that has been passed and paid for based on the assessed value of your home will also impact how expensive the property taxes are.

      Your home owners insurance premium may also adjust. The only items that are “fixed” in your payment is the principal and interest portion. Your private mortgage insurance may reduce and/or eventually drop off your payment.

      Good luck!

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