When owning a 2-4 unit home, as an investor or owner occupied, the borrower typically needs to be covered for loss of rental income. This insurance can cover the income lost in case of the building burns down and needs to be rebuilt or even if a tenant moves out (check with your agent). Not all lenders require it if the home is owner occupied, but it seems to be going that way. A few guidelines would be:

• Rental loss insurance is required on all investor 1-4 unit homes
• Rental loss insurance is required on a 2-4 unit owner occupied home if the income is used to qualify for the mortgage
• The coverage should be for a minimum of 6 months’ rent
• The coverage will be based on the market rents listed in the appraisal  (ask your agent what they need)

Loss of rental insurance premium is nominal and is usually a rider to the homeowne’s insurance policy (fire and theft). It is a good idea to ask for a quote from the agent upfront, because it will be added into your housing expense when qualifying for the mortgage, as well as taken out of your pocketbook! Happy flying!!  mmmm, Tapas!

–Dale Robyn Siegel