Financing in 08028>Question Details

Stephannbro…, Real Estate Pro in De Witt, NY

Have live in our house for over 10 years but refinanced FHA loan 10 months ago...can we rent out our current size has increased..

Asked by Stephannbrown, De Witt, NY Wed Jul 17, 2013

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You can purchase another home and still obtain an FHA mortgage. Most people believe you can only have one since it is for the purpose of a primary residence. As long as you can supply proof that your family has grown (birth certificate for example) you can definitely obtain another FHA mortgage. I live in Glassboro myself. If you would like to talk to me about renting or selling your current home and finding a home more suitable, please give me a call.

Cara Castrataro
Sales Associate
Century 21 Rivera Realty
Office: 856.404.9260, ext. 198
Cell: 856.896.8078
0 votes Thank Flag Link Fri Aug 9, 2013
If you are simply asking if you can rent your home in this scenario, then yes. If you are planning on buying another home with FHA financing, you are able to do this too. Here are the caveats:
1. If you plan on holding two FHA loans, you can by proving that your family has outgrown the current property.
2. If you plan on offsetting the current housing expense on the property you are renting, to allow you to qualify for the new FHA loan, you will need to prove that you have at least 25% equity in that property. Two ways to do this: if for some reason you have prepaid on your loan and the balance is <=75% of the original loan balance (very unlikely at 10 year mark assuming you put 3% down, which was the minimum down payment requirement 10 years ago - now 3.5% OR get an appraisal done on the property and hope that the loan balance / appraised value is <=75%. You will need to pay for the appraisal and I would check with the lender on the new loan to see if they need to choose the appraiser before you go out and get it done.

You could always refinance the existing property into a non-FHA loan before you look into purchasing the new property to avoid the dual FHA loan issue all together, but you will need to buy the new property with FHA financing because FHA does not require a 2 year history of rental income like Fannie and Freddie (conventional lending). FHA will allow you to use future rent to qualify with a signed lease and at least one month of rent received (down payment, first month's rent, etc).

Lenders may add additional underwriting overlays (higher restrictions above and beyond the standard FHA underwriting guidelines), so don't just assume that you read it here and you are good to go. You need to decide on a good mortgage banker and have a detailed discussion with them around this and have them construct the deal and run it through a preliminary underwrite before you start signing contracts.

I can help you if you'd like. I can write loans in 50 states with JPMorgan Chase. I can also issue you a pre-approval through our Home Buyer Advantage (HBA) program. This would be at no cost to you and would be a full underwrite on a loan before you even found a property. That way you know what you qualify for prior to shopping for something out of your price range. This is not a pre-qual, which we and any other bank will do. A pre-qual does not go to an underwriter for full approval, it is issued after your data is run through an automated underwriting engine. Pre-quals are good b/c they are quick, but pre-approvals are better b/c not only do you know exactly what you are qualified for, you can also use this as a negotiation tool. Who do you think the seller would want to sell to, the guy that has the bank committing to lend with a full underwrite, or the guy with the pre-qual letter?

If you'd like help please reach out to me.

Ryan McPartland
Mortgage Banker
JPMorgan Chase
0 votes Thank Flag Link Thu Jul 18, 2013
Thank you for your help. We have actually already been pre-approved, our main concern was that we had heard that some lenders will deny you the right to rent out your home....
Flag Thu Jul 18, 2013
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