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Can I get a mortgage to buy a home when I already have a mortgage for a rental property?

We own a home that is likely a bit under water.  We are renting it out and almost covering our monthly mortgage payment.  We had to move for work and are currently renting but are interested in buying as our searches have shown we can get a much bigger, nicer place for a lower monthly payment if we do.  What I was hoping to find out is:
1) Will it even be possible for us to qualify for a mortgage?  Other than owning the rental house, we are in good shape: we have great credit and are both employed in stable jobs and are able to cover the small difference between the rent we're collecting and our mortgage payment without any trouble.  
2) Are the only loans being offered these days requiring 20% down or is it possible to pay less?  
Thanks in advance.
  • October 08 2011 - Charlottesville
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Answers (2)

One of the biggest factors will be how long you've been renting your home for. If it's been less than two years it will make it harder to qualify for another mortgage. And yes a fha or va loan could be used if the house you are buying is going to be your primary residence and not a rental property as well.
  • October 09 2011
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Good morning AlisonM13,
The short answer is yes, you may qualify for a new primary residence, and FHA allows for as little as 3.5% down, VA and USDA allow up to 100% financing. Unless you have rented the original home for two years or more, you may have to count the entire payment in your debt ratio to qualify. If you can manage keeping your debt ratio 45% or less, you should be fine.
Best wishes, Jim.
  • October 09 2011
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