One thing to note also, as that when it comes to what you charge for rent, FMV is a subjective figure. Basically, FMRV (Fair Market Rental Value) is not determined by the rental property owner. IT's determined by "what the consumer is willing to pay".
It's perfectly possible that comparable rentals in your are may rent for $1500/mo, but you can only get $700/mo for yours because if it's dilapidated condition. Just be prepared to support your claim of it being FMRV if ever audited. Generally, (but not always) a property appraisal will do the trick, if not help immensely in the case of an audit.
Yes, there are situations where the FMRV is less than the mortgage payment. I do know that back in 2009-2011 it was quite common for such a situation when the housing market was depressed and people could not refi at lower rates. But nowadays, make sure you can support your claim of FMRV if your rent is less than the mortgage payment. Otherwise, you must selection the option that you are renting at below FMRV, and that will limit your deductible rental expenses to your taxable rental income and carryovers will not be allowed.
