1. What is the FNMA Projected Income Calculation?

The FNMA (Fannie Mae) projected income calculation estimates annual rental income according to FNMA guidelines, applying a 75% adjustment factor to account for vacancies and expenses.

2. How Does the Calculator Work?

The calculator uses the FNMA formula:

Where:

• \( Rent \) — Monthly rental amount in USD
• \( Occupancy Rate \) — Expected occupancy rate (0 to 1)
• \( 12 \) — Months per year
• \( 0.75 \) — FNMA adjustment factor

Explanation: The equation calculates annual projected income by multiplying monthly rent by occupancy rate, converting to annual, then applying FNMA's standard 25% vacancy/expense factor.

3. Importance of Projected Income Calculation

Details: Accurate income projection is crucial for mortgage underwriting, property valuation, and investment analysis when rental income is involved.

4. Using the Calculator

Tips: Enter monthly rent in USD and occupancy rate as a decimal (e.g., 0.95 for 95%). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why does FNMA use 75% of gross rental income?
A: The 25% reduction accounts for potential vacancies and operating expenses, providing a more conservative estimate of net rental income.

Q2: What is a typical occupancy rate?
A: Well-managed properties typically have 90-95% occupancy rates, but this varies by market and property type.

Q3: Does this calculation include other income sources?
A: No, this calculates only base rental income. Additional income sources (parking, laundry, etc.) require separate calculation.

Q4: How does FNMA treat multi-unit properties?
A: For 2-4 unit properties, 75% of gross rents is typically used. Larger properties may require different underwriting standards.

Q5: Is this calculation used for all loan types?
A: Primarily for conventional loans. FHA and other loan programs may have different guidelines for rental income calculation.