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Can i buy a second home with little down?

Id like to buy a home with little down so i can dump my underwater home. Is this possible?
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May 06 2013 - Chino
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Answers (4)

The answer is no.

No, you cannot buy a second home with the "intent" to dump your second home.

@Ayhan - you are correct - in order to purchase your current home will come into play.

Rules were put in place to prevent "dumping" or what was labeled "Buy and Bail"
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February 19
First of all, the difference between science and real life applies to real estate business too. Thus, there is always a way to do what you would like to do. Yet the numbers don't lie. If your current house is underwater and you are trying to "dump" it with least damage possible, this  will affect your next purchase regardless. Although I agree with my colleagues on  their suggestions, I would like to recommend you to discuss the financing issues with a loan officer. Best Lucks
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May 06 2013
There may be some options for you. We can rent out your current home, use 75% of the rental income and assist you in purchasing another primary residence for as little as $100 down if it's a HUD owned home or a normal FHA loan for 3.5% down. If you would like to discuss the options contact me through my profile as we aren't supposed to put our contact information on these posts. I look forward in speaking with you and figuring out a solution.
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May 06 2013
Skipping over the fact that you want to "dump" your current underwater home you can purchase a new house with FHA 3.5% down or conventional 3.00% down if you qualify on debt to income ratios carrying both houses plus any other monthly debt obligations you have.

With some exceptions the maximum debt to income ratio on most FHA loans is 50% and 45% on conventional.

The "buy and bail" rule is you may not use rental income from a lease on the old house to offset the PITI payment to lower your debt to income ratios unless an appraisal on that house establishes that you have 30% equity (conventional) or 25% equity (FHA), which you obviously do not have it is underwater.

If you qualify on DTI ratios with no rental income, carrying both mortgages you can purchase another house and what you do with the old house after that is up to you and won't much matter to the new lender that financed your new house if it is after the fact.

The foregoing isn't meant to encourage you to "buy and bail" just stating what the requirements are to be able to purchase another house.
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May 06 2013
 
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