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Will Rental Income

I want to buy a larger home using my VA loan. I want to rent out my existing home covering the monthly liability. Do lenders require that I have sufficient income to cover both loans or can the rental income be factored in?  How will that rental income factor into the debt to income ratio?  Thanks!!
  • December 01 2010 - Santa Clarita
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Answers (4)

Hi Will,

Your rental income can be factored in. They may want to have an appraisal of the area to see if your rent is above or below the average. I would strongly advise you to contact a mortgage professional who regularly deals with VA loans.
  • December 01 2010
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Most lenders require you to have 30% equity in your home or be able to afford both house payments. They will do a rental survey and the rental must meet those numbers in order for them to accept it as being ledgit. There are also some other requirements in the works last time I checked with some rentals needing to be seasoned and reserves, along with experence in renting property.

Is your current home financed using your VA benefits?

The reason I say most lenders is because not all lenders will be 100%.

The market is very liquid, so what I say now may have changed in the last 10-minutes. The best thing to do is contact a "Direct Lender" (Wells Fargo, Bank of America, etc...) and run it past them.

Good Luck in your search...
  • December 01 2010
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If you can afford both, no equity needed.  Otherwise you'll need 30%, lease agreements, rental surveys, possible appraisal on the rental, cashed checks from your new tenant and 6 months reserves for the rental's mortgage payments. 

Direct lenders are no bonus of information, by the way.
  • December 01 2010
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It may be possible to include the rent as part of your income, which the Lender will request Rental Survey by an Appraiser.  They won't count the entire Rent, as they will calculate approximately 75% occupancy.  Also, you will need to make sure you have at least 25% equity or better to be able to include the rent; otherwise, you'll need to qualify based on both mortgages.
  • December 01 2010
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