Financing in 48103>Question Details

Rdotgdot, Both Buyer and Seller in 48103

Do I really have to rent my condo for 2 full years before a lender will consider this income in regards to obtaining a new loan for a bigger house?

Asked by Rdotgdot, 48103 Mon Oct 31, 2011

Hi everyone. I currently own a very nice condo in an ultimately failed rental-to-ownership conversion project. The developer fled and claimed LLC bankruptcy. Now the bank has foreclosed and sold out to a well-meaning rental management company. While I technically believe to not be underwater on my condo loan (bought for $208k, now owe $146, but Ann Arbor MI market is doing alright and location is very desirable), I still cannot sell because the mgmt company owns x of the condo units, so no lender will issue financing for a prospective buyer (so I am told, is this correct?). Now married and looking to start a family, we'd like to move into something bigger. I have no problem renting my condo, while we rent something more affordable, saving money for a better down payment. However we'd still like to buy something bigger SOON. Do we really have to rent the condo for 2 full years before this income can be considered for obtaining a new loan?

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You'd have to move out of your home and start renting your condo before you could think about doing anything unless you can qualify for both payments simultaneously. Once you have a fully executed lease, collected at least one month's rent and have verification of a security deposit being collected (most likely cashed as well), you should be able to obtain new financing for an owner occupied home. I can't speak for all lenders but this is the minimum requirement you'd need with any lender (myself included) to obtain new financing now.

If you wanted to buy another property for investment purposes and use the rent to offset the mortgage, you'd need to show two consecutive years of Schedule E rental income on your tax returns to be able to use those funds for qualifying.
Web Reference: http://RobWeber.com
1 vote Thank Flag Link Tue Nov 1, 2011
It depends on the lender but generally yes. Although I have seen some that will get through under writing with a signed lease once they review it. It depends on the reserves you have saved.
0 votes Thank Flag Link Sat Dec 28, 2013
This really depends on the individual circumstances and the lender that you are working for. It would be best to discuss this with them.
0 votes Thank Flag Link Thu Jan 12, 2012
You're good to go! Feel free to email me if you need more follow-up. My website is listed below.

P.S. If you found my original post useful, please give it a thumbs up or preferably, "best answer" as that's how we get credit for our helpful efforts. :)
Web Reference: http://RobWeber.com
0 votes Thank Flag Link Tue Nov 1, 2011
Thanks Rob!

Thats good news. The point would be to temporarily rent something cheap while searching for a new home and saving a more substantial down payment. In the meantime renting my existing condo to cover the existing mortgage. I was just nervous that I wouldn't be able to use the condo rental income as qualification for a new loan, but from your answer I should be ok.
0 votes Thank Flag Link Tue Nov 1, 2011
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