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Illegal Units OK; Can’t Use Income from Them

In older communities, there are numerous properties with illegal or un-permitted units -either stand-alone or attached “in-law” set-ups.

Many of our lending sources allow un-permitted units as long as they are built in a workmanlike manner. However, lenders do not allow value to be attributed to them (in most cases), and they do not allow borrowers to use income from them to help qualify for financing.

If the units are legal or permitted, then borrowers can use the market rents from the units to help qualify. This is advantageous for borrowers with limited income.

Jay Voorhees
Founder/Broker | JVM Lending
(925) 855-4491 | DRE# 01524255, NMLS# 335646