Rental property

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Asutexan
Posts: 15
Joined: Sun Jun 26, 2011 1:16 pm

Rental property

Post by Asutexan »

If you are looking to buy a new primary residence while keeping your current home as a rental, what will the mortgage company require to qualify for the new home? I have heard you need 30% equity in the rental or two years of rental income to exclude the rental mortgage from the debt to income ratios on the new mortgage. Anybody have any experience with this?

By the way, I am not planning to do this now...just trying to plan 5-6 years out
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MilkMoney
Posts: 23
Joined: Mon Jan 09, 2012 5:17 pm

Re: Rental property

Post by MilkMoney »

30% has been the norm for the last several years, at least in my experiance.
tonsofthorns
Posts: 31
Joined: Sat Feb 11, 2012 1:22 pm

Re: Rental property

Post by tonsofthorns »

As long as your income is large enough to support two house payments you should be able to qualify with only 20% down for a primary residence to avoid PMI.
The bank usually wants to see any rental property income on you tax return to count it as income.
Sulvar
Posts: 293
Joined: Wed May 26, 2010 2:27 pm

Re: Rental property

Post by Sulvar »

The last time I bought a home, the bank wanted to see 1-2 years of tax returns that showed rental income on it plus a signed lease for my current tenant. Since you won't have this, you will probably need to qualify for the new house with income sufficient to pay both mortgages.
bungalow10
Posts: 2271
Joined: Sat Apr 09, 2011 6:28 am
Location: Chicago North Shore

Re: Rental property

Post by bungalow10 »

Sulvar wrote:The last time I bought a home, the bank wanted to see 1-2 years of tax returns that showed rental income on it plus a signed lease for my current tenant. Since you won't have this, you will probably need to qualify for the new house with income sufficient to pay both mortgages.
This is our experience as well. If you don't have a signed lease on the first house, you will need to have the income to support both mortgage payments.
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