Lenders and appraisers treat boarding house income differently depending on whether the property is being underwritten as residential or commercial, and that distinction matters more than the lease format itself.
A standard residential underwriter, the kind you would find behind a conventional or FHA loan, typically expects signed leases with fixed terms. Month-to-month room agreements often read as informal, and an appraiser may discount or exclude that income if there is nothing in writing that shows consistent payment history. Your 22 months of occupancy is genuinely useful evidence, but you would need to present it: bank statements, a rent roll (that is a simple table listing each room, the monthly rent, and how many months it has been occupied), and written agreements even if they are month-to-month.
The bigger issue is that 16 occupied rooms in a single property may push the lender toward commercial underwriting rather than residential. Commercial lenders are generally more comfortable with non-standard income streams, and they tend to evaluate the property on its actual cash flow rather than on whether the agreements look like apartment leases. The tradeoff is that commercial loans usually carry shorter terms, higher rates, and larger down payment requirements than residential mortgages.
On the appraisal side, the appraiser will look for comparable boarding house or rooming house sales in the area. Rural counties can make that search difficult, which sometimes pushes the valuation toward land value plus improvement cost rather than income-based valuation. That can hurt you.
A mortgage broker who works with investment properties, and ideally has done rooming house or boarding house deals before, would be the right person to map which loan products actually fit this asset. I would not rely on a general residential broker for this one.
What does the 16-room property look like on paper right now? Do you have a rent roll, or are agreements mostly verbal?
