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Rental property

Posted: Wed Feb 15, 2012 8:49 pm
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

Re: Rental property

Posted: Wed Feb 15, 2012 9:28 pm
by MilkMoney
30% has been the norm for the last several years, at least in my experiance.

Re: Rental property

Posted: Wed Feb 15, 2012 9:59 pm
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.

Re: Rental property

Posted: Thu Feb 16, 2012 9:33 am
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.

Re: Rental property

Posted: Thu Feb 16, 2012 9:52 am
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.