Can rental-property income count toward a personal-loan application?

Rental income is the trickiest non-W-2 source to document. Lenders require two years of Schedule E (the IRS form for rental real estate) showing the property has produced consistent net income. The qualifying figure is net rental income after expenses, mortgage interest, and depreciation, multiplied by a 75% vacancy factor.

The 75% factor catches landlords off-guard. A property netting $1,200 a month on paper qualifies at $900 for underwriting purposes, on the assumption that vacancy and capex will eventually erode some portion. Lenders apply this even to fully-occupied long-tenured rentals.

Properties under 24 months of ownership are typically excluded from qualifying income; the lender wants two full tax years of rental history. Short-term rental income (Airbnb, Vrbo) is treated similarly: two years of Schedule E history, with the 75% factor, and the additional caveat that some lenders apply a higher vacancy adjustment (50 to 60%) on short-term rental because the income is less predictable.