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can i qualify for a mortgage with rental propery

I own a house and plan to rent it. I would like to buy a bigger house. can I qualify for $350000 mortgage with no debt except $980 mortgage on current house. with credit score 768 and income:$80000/year. I have $60000 for down payment
  • December 10 2013 - Richmond
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Answers (9)

It seems that you have all the finances necessary and good credit. There are a couple you can go at buying this house when it comes to the loan. You can either do conventional or FHA depending on your current house situation. Either way, the best thing for you to do is to speak with a lender directly to see if you can get started on financing a new home. There are lenders like myself that would be glad to speak with you to help you get the loan that you need. Well I hope this helps! If you have any further questions or if you would like a loan, feel free to contact me!

Good Luck
  • December 12 2013
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You appear to be in a good range to look at doing this.  In order to use rental income to offset the mortgage payment from you current home, you'll typically need to verify 25% to 30% equity in your current home.  With that said you may not even need to worry about that.  I would suggest that you complete a mortgage application with a Virginia licensed loan officer in order to fully review your debt to income ratio.  I'm happy to look at this for you.  Just let me know.
  • December 11 2013
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With the information provided I would have no problem approving you for a new mortgage of $350,000.
  • December 11 2013
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The only loans that do not require a 2 years of filing a Sch E (rental income) is an FHA, VA or USDA. With these programs, as long as you have claimed at least (1) month of rental income on the previous tax return, then we have to use the rental income at 75%. Conventional financing requires a two history. So, you have a small window of opportunity now. For example if you rented out your home in December 2013, and you moved to another residence, then you claimed the rental income on that years 1040s, you will have the benefit of using the rental income to offset your existing mortgage. In you case, doing the math I would say you don't have a DTI issue like most people. The average borrower can't afford two house payments.

Best of Luck!
  • December 11 2013
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If you have 30%+ equity in the property you will be renting (vacating to purchase the new home), then rental income can be used to offset your debt-to-income ratios (DTI), if necessary. You would also need reserve funds. If you don't need any rental income to qualify, then your DTI is calculated by using the principal, interest, taxes and insurance for both properties - new property and the one you will vacate.
  • December 10 2013
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With Fannie or Freddie conventional loan your rental income  would not  be added in.
Subtract the monthly principle interest tax and insurance from your monthly gross paycheck.

This leaves  $2445  for  your new total payment  Sounds like you want to buy a $400000. home   -the  ratios are acceptable----  assuming you worked same job 24 months, middle  FICO is above 680, and you  don't have  car payments,  credit card debt and all the  myriad of ins and outs.

Find  a local mortgage Banker who you feel listens to your needs
  • December 10 2013
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Based on the figures you posted, probably. Is your income all salary? If not is it an average of the last 2 years? 
  • December 10 2013
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The rental property is not going to hold you back from purchasing a bigger home to live in.

The only thing you have to be concerned with is that you won't receive credit for the rental property income the first year, so all of the monthly payments (tax, insurance, Association) will count against your debt to income ratio.

Other than that, you're good to go, specially with the $60,0000 down payment. Depending your payments on your first home, it sounds like a realistic goal. 
  • December 10 2013
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  • December 10 2013
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