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Self employed - Is it possile for us to buy another home and rent our current home?

We are steadily self employed, have been for three years.  Last year our income was 70,000, this year it will be around 80,000 (net income).  We are currently still underwater by 40,000 on our current home that we are living in.  We want to keep this home and rent it out, and buy another one to fix up and live in.  We've got about 25,000 in savings and have excellent credit.  Is this possible?  What can we do to increase our odds?
  • February 05 2014 - Bremerton
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Answers (4)

The fact that you are underwater is not an issue if you keep it as a rental. When you apply for a loan for your next home, a lender is going to have to count the entire house payment on the old home as a liability. Unless you have a history as a landlord, the lender will not be able to offset that payment with any rental income until you have a two year history as a landlord.
  • February 07 2014
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It's possible but it wouldn't necessarily increase your odds of obtaining another mortgage. Lenders like myself would not be able to count future rental income in your mortgage application. There would need to be a history of rental income before we can count it. As long as your current finances are strong enough to support two mortgages, then you should be good to go. The best thing for you to do is to speak with a lender such as myself to see if you can get started on financing a new home. If you have any further questions or if you would like a loan, feel free to contact me.

Good Luck!
  • February 07 2014
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You won't be able to count the rental income without equity. If you can qualify without it you should be good. Talk to a loan officer and have them work up some numbers for you. It's impossible to calculate without looking at your tax returns and credit report (consumer debt). 
  • February 05 2014
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As long as your self employed income will be able to cover both the payment on the house you are leaving and the new proposed house payment should be fine to qualify.

  • February 05 2014
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