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Qualifiying for a second home mortgage when primary home is an expensive rental

Here is our situation

Our primary residence is in State A. In 9/2012 I left my job and started a business in state A.. Our goal is to move to State B, start a new business while winding down the old business, and buy a house. It was suggested to us that we apply for a second home mortgage based on the income from my first year in business. We do not have a mortgage on our primary residence and we have no debt. However, I rent payment is quite high.

Will this expensive rental be an issue in qualifying for the second home mortgage?

Any concerns about using a second home mortgage, and soon thereafter moving into that home as our primary residence?

Any other ways we can do this?
  • August 25 2013 - Seattle
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Answers (3)

Hi There!

There's actually a new niche program that allows this income scenario, depending on how strong your FICO is and depending on the amount of liquid assets you have.

You can reach me through my profile if you'd like to discuss this further.
  • August 27 2013
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Most lenders will not even consider you until you have at least 2 years history of being self employed.  You might consider your income as high but they will want to see what you are reporting to the IRS after all of your write-offs and deductions.  That is the income they are going to use to qualify you. 

So basically if you tell the government you make no money (to reduce tax obligations) you are saying the same thing to a mortgage company or bank thus reducing the likelihood of being able to get a new mortgage.
  • August 26 2013
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The concern is not the second home vs primary situation.  The concern would be that you have only been self employed for under a year and unless you really hit the ground running not being able to show enough income on your tax returns.  You would have to qualify with both the rental payment and the new mortgage.
  • August 25 2013
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