When does rental income qualify for mortgage refinance?

[Mark Ward]

I'm in the process of negotiating a refinance of my residence in Montgomery County, Maryland, with our lender, USAA, which over the years has been reliably helpful. However in establishing our debt/income ratio, they refuse to accept the income we receive from renting our basement apartment, thus preventing us from borrowing as much as we would like. They assert that this is out of their hands, because federal rules, or maybe underwriter rules, forbid considering rental income in a house designated as a single family dwelling.

Our basement apartment, like others in this area, is licensed for rental as an Accessory Apartment in a Single Family House by the Montgomery County Department of Housing and Community Affairs. The position which USAA is taking would seem to indicate an inflexible application of regulations. Whether federal, underwriters' or other, I have only oral statements from USAA representatives that their hands are tied. The result benefits neither lender nor borrower.

Can anyone suggest a way around this problem?

[dsemler]

Does the income show on your tax returns? Does it show for the last 2 years?