Qualifying for an FHA loan, while holding a convential loan on a rental unit.
Asked by Casey Mohan, Newburyport, MA
Wed Mar 30, 2011
I have a convential loan on my condo (which I have used as primary residence since purchasing 6 years ago) and will be renting that out. My question is can I a.) qualify for an FHA loan on a new primary residence and if so can I b.) use the income from that rental in my gross income numbers when qualifying for the new FHA loan?
Mortgage Broker or Lender, Washington, DC
FHA allows you to use rental income from your departure property ie current home when buying a new home if you can demonstrate 25% equity (appraisal necessary) and have a copy of a lease. We want a copy of the first months cancelled rent check but I think that is an overlay from us and not necessarily an FHA guideline.
Hi, Casey. Short answer to both questions: Yes. No. Yes you can get an FHA mortgage for your new primary. And, no, you can't utilize the future income from renting your current home w/o first already having a 2 year history of collecting it on your tax returns. Unless you already have 2 years of disclosed rental income from other properties. If so, for FHA, you would then only need a lease agreement .
Not my field, but to the best of my knowledge,lenders use actual, not hypothetical rent income in determining your income. You wouldn't be able to use rent from other properties as potential income. Excuse me, if that's not what you meant.