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My mom has a house with a reverse mortgage, and she has an in-law apartment attached to her house – a separate door to the apartment and a firewall door between the apartment and her house. She has rented the apartment in the past (before Reverse Mortgage) to various people during the summer. She still lives in her part of the house. She is getting older and using Airbnb to rent a separate apartment would be a lot easier. I have seen questions about the transient rental of a single unit but could not tell if that is not Airbnb related to renting a unit where the owner is away temporarily or if it applies to this situation. Thanks!

By Kate on 01.04.2019

Hello Kate,

When HUD established its Financial Assessment guidelines on November 10, 2014, they began allowing “border” income on the subject property.  They started to allow borrowers to use revenue from people renting a room if the payment was reported on the borrower’s tax returns and the borrower had a 2-year history of receipt. 

However, HUD has not allowed the use of transient income; they define that as income from individuals for durations of less than 30 days.  This income is not considered boarder income as much as business income; it is deemed the same as running a business from home (much like a hostel or hotel).  This typically makes the property considered the same as a commercial usage property and one that would not be eligible for HUD mortgage insurance.

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