Rental income for an applicant can be documented using which of the following?

Documenting rental income for an applicant is best accomplished using Schedule E and a federal tax return for the past two years. Schedule E is specifically designed for reporting income or loss from rental real estate, royalties, partnerships, S corporations, estates, and trusts. This schedule provides a comprehensive overview of the rental income, including expenses associated with managing the property, which can help in assessing the net income generated from the rental activities.

Using a federal tax return for the past two years supports the documentation by providing the necessary context and verification of income over a consistent period. By looking at these two years, lenders and underwriters can evaluate the stability and reliability of the rental income being reported.

In contrast, although other options could provide some information about income, they do not offer the same level of detail or reliability when it comes to documenting rental income specifically. For instance, Schedule C is intended for self-employed business income, while Form 1099 focuses on various types of earned income rather than rental income specifically. Deposit slips could show cash inflows, but they do not provide a full picture of the rental income, such as expenses or the net income derived from the rental property, and might not provide sufficient documentation on its own.