If you have not filed tax returns showing that propety as a rental you would need the following to use the rental income:
1. 30% equity in the property as evidenced by an appraisal, AVM(automated value).
Then rental income can be used if you can provide a copy of the signed lease & copy of the security deposit . The underwriter will use 75% of the gross rents
If you can't document the 30% equity, then they will count both payments against your income and they will require 6 months of the total payments for BOTH properties in cash reserves.
So, in answer to your question, rent the condo for 1 year before you buy and you shouldn't have a problem counting the income, or make sure you have the correct amount of equity and rent it when you get the offer accepted. This of course only applies if you can't qualify for both payments.
You should really have a mortgage professional look prequalify you and they can tell you what you will need ot do. If you would like my help - feel free to give me a call at 877-933-3330
Guild Mortgage Co.
Of course there are many moving parts and variables to your scenario....including complete debt to income ratio(to include market value rent, any cash reserves,credit scores...so forth.) What would be most advantageous for you is to meet with a very qualified and seasoned mortgage professional who can sort through the pertinient information while assessing your needs goals and expectations. Being ready and willing are great first steps then let the professionals help you determine the able part.
I owned a condo and lived in Daly city for 16 years and love doing business in the area if I can ever help...It would be my pleasure.
I hope this goal puts you on the path to Real Estate Mogul :) Have a great day Raymond Cheers Denice!
The challenge is to show the lender that your intention isn't to buy a replacement (usually cheaper) house to walk away from the upside down condo. This scenario has happened all too often, and lenders, if nothing else, are not ignorant of that potential with any buyer.
You're obviously going to have to do a bit more thinking and coming up with other alternatives and strategies, but I would do that with the help of a cooperating lender who is willing to offer you guidance and direction to that end. I work with lenders who do that. Let me know if I might be of service. In the interim, season's greetings!
J. Mario Preza, CRB