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Minimum down payment?

We're considering renting out our current home and buying a new primary residence.  What would our minimum down payment be in this situation?  Other than the obvious (affording two mortgage payments, finding a suitable tenant, etc), are there any other ramifications we might not have thought of?  Thanks!
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July 16 2011 - Henderson
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Answers (4)

Being 15% underwater lenders will look at this as "Buy and Bail." You may find getting a purchase loan difficult."

Without 30% down you will not be able to count 75% off rental income in your debt-to-income ratios. Besides qualifying with both payments and HOA dues if applicable, you will need your down payment, 6 months reserves on the rental and two months reserves on your new primary residence. Rental income insurance may also be required in addition to your property insurance.

Best wishes, Rudi

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July 17 2011
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This has tax ramifications at both the federal/state (capital gains) level and the local (property taxes) level.  I would check with an expert who is familiar with local tax laws.  

Check with your current lender, this change may put you in technical default of your mortgage loan.  Generally rental/investment properties are charged a higher interest rate and present a greater risk.

This would also affect your qualifications for the federal first time home buyer credits from a couple of years ago if you happen to have taken advantage of that credit.
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July 16 2011
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We're underwater by at least 15%.
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July 16 2011
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How much equity do you have in your current home (by percent)?
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July 16 2011
 
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