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Answers (4)
- Clay Branch, "Georgia Loans"
- Contributions:7839
If you go the FHA route, in addition to the equity needed you also have to have a signed rental agreement and the renter's deposit in your account.
- John Conklin, "203K Alternative"
- Contributions:130
When you convert your primary residence into a rental property which is what we are talking about. You can off set the cost of your current mortgage payment if you have 30% equity in the departing home. That applies to Fannie Mae and Freddie Mac. If you will be purchasing the new home with an FHA loan you will need to have 25% equity in the departing home. If you do have the equity you can use 75% of the rental income to off set your current mortgage payment, as long as it's inline with the average rents in that neighbor hood. If you do not have equity you will need to quality with both payments being count against your debt to income.
- RichardReid
- Contributions:197
You are going to need to qualify with both mortgages. Regardless of the type of loan you want to apply for, a bank would typically want to see history (ideally 24 months) as a landlord in order to count rental income in the qualification process. As Patrick stated, equity in your current home will certainly come in to play. The bank may also take the length of time in your current residence into consideration if you have not been there long.
- Patrick Nolan, "Bucks County Banker"
- Contributions:239
Sounds like you are not really talking about purchasing a second / vacation home, but a new primary residence. Under current Fannie Mae / Freddie Mac underwriting rules you will need to qualify carrying both houses with no rental income from the current primary residence unless you can demonstrate:
1) 30% equity position in the current home by the lender obtaining an appraisal on that house
2) Signed lease, copy of cancelled check from the person leasing for the first month's rent and security deposit.
1) 30% equity position in the current home by the lender obtaining an appraisal on that house
2) Signed lease, copy of cancelled check from the person leasing for the first month's rent and security deposit.
Want To Move Up/Purchase 2nd Home in Atlanta
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