Home Buying in Fort Worth>Question Details

Silencestyle…, Home Buyer in Fort Worth, TX

I own (still paying for it) a home now, but i want to buy a bigger one and rent the one i have. Can i buy an other house now?

Asked by Silencestyle03, Fort Worth, TX Fri Jan 18, 2013

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Jim Simms’ answer
It isn’t as simple as the others have already answered. The type of loan you have on this house, the type you use to buy the next one, cash reserves, are all part of the equation. Your question is general in nature; the mortgage underwriting guidelines are very specific in nature. You can’t have 2 FHA loans in the same area, usually. If you are using an FHA loan to buy the next house you need to have at least 25% equity in the existing house.

There are all types of quirky rules like that on this topic. Gather up all of your support documents and then meet your loan officer face-to-face and review everything. Only then can you feel safe moving forward. Inspections, appraisals, etc. are expensive mistakes if you do not meet all of the requirements. Good luck,

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
Web Reference: http://jamessimms.com/
1 vote Thank Flag Link Fri Jan 18, 2013
As others have said, your debt ratios would have to support both loans. You may be able to get some of the debt on the current home backed out if you can get a legitimate tenant in the current property, and be able to show an executed lease and the canceled first month's rent check.

I would recommend taking a HUD approved landlord class as well. Sometimes being a landlord isn't a bed of roses.

John Lyng
Mortgage Counselor - NMLS 280951
1 vote Thank Flag Link Sun Jan 20, 2013
As long as your credit, income and debt ratios qualify you for a loan there's no problem doing this, you'll need to speak to a mortgage lender to see if you qualify. Note that you will receive no credit for the rental income until you've been succesfully renting the property for at least two years and can document this. Note also if you do this you should speak with your insurance agent as you'll need different coverage on your current home and you may want to consdier picking up an umbrella policy if you don't already have one.

Best of luck.
1 vote Thank Flag Link Fri Jan 18, 2013
Excellent answer Larry!
Flag Fri Jan 18, 2013
Why not? If you have surplus budget, then go for it. In fact, this is a wonderful idea of staying in one home and renting other to keep the income flowing. Check your account, talk to lenders and best of luck!
0 votes Thank Flag Link Thu Jan 24, 2013
Actually Rick I cannot help in this scenario as NACA does not help those that own another home. They can be one day past selling their prior home to close on a loan with NACA. You may want to check out our website at http://www.naca.com. I can help you close loans banks will not.

I have been a Mortgage Banker in a past life so sometimes I throw my 2 cents out there even on situations I don't deal with right now.

John Lyng
Mortgage Banker - NMLS 280951
0 votes Thank Flag Link Sun Jan 20, 2013
Mr. Lyng just gave you some good information. He is a Mortgage Counselor, and he can help you get pre-qualified for the loan you will need to buy a second house.
Since we don't know anything about the value of the house you are living in, or how much your current loan balance is, we can't give you a specific answer here in this forum. You will need to contact a highly experienced Realtor to go over the numbers with you.
Let's assume your house is worth $100,000, and you bought it several years ago. Perhaps your monthly payment is as low as $700. And in today's market, I can rent it for $1,000 a month. The new lender will look at your lease contract and take 70% of the incoming rent money as an offset toward your mortgage payment debt. Since 70% of $1000 is $700, and that equals your monthly payment, it's a wash! Which means the debt of $700 a month is not held against your qualifying ratio as a car payment would be.
.So now, all you have to do is qualify for the amount of the monthly payment on your new loan. And once we work out those numbers, then you will know what size of a house you could buy. Once I show you where those houses are located and how large they are, you can then decide if you want to make a move. As you can see, there is a lot to consider before you go out and drive around looking at houses.
Contact me on Monday and we'll go over your specific situation with you in more detail.
Have a nice evening!

Rick DeVoss

ULTRA Real Estate Services



0 votes Thank Flag Link Sun Jan 20, 2013
Hi - I am in the process of doing this myself and was told by my mortgage lender that there are 2 scenarios. If I rent out a current home and I have 30% equity in it then I can count the rental income as "income" in order to qualify for another home loan. If I do not have 30% equity then I will need to qualify for all the loans/payments as if my home is not rented out.

Either way, you will need to qualify for the total of all mortgage payments, just one way you'll be able to have some offsetting income.

I believe these rules are mortgage related and so nationwide in nature, though as other have mentioned on here, you ought to talk to a good and trustworthy lender for absolute confirmation.

Good luck,
0 votes Thank Flag Link Fri Jan 18, 2013
Mr. Simms gave you a good answer. Some of the other responses on here are worthless. And once again, we get to see a blatant ad from Mr. George Felan. (See answer #6 below.) I would appreciate it if other Brokers would weigh in on this topic.

Mr. Felan is offering a monetary rebate if some buyer would only call him. It is a bit fuzzy as to what that amount would be, since he says "$500--$1,000 out of my commission." Which is it George? $500, or $1,000?? There is a big difference. This implies that there are some restrictions on his offer, and you would have to call him to find out what they are. This is a blatant violation of the rules for advertising as published by the Texas Real Estate Commission. ALL restrictions must be published in such an advertisement.

Mr. Felan states in his ad that the closing price of the house must be above $100,000. There are many good rental property candidates that are priced below $100,000 in today's market, so that must mean that you wouldn't get any rebate if you were buying one of them through him anyway.
He also states that you (the buyer) must purchase a house from "an individual." And then goes on to rule out "Short sales." So even though the house is sold by an individual in a short sale scenario, you would not get his rebate. Perhaps his two degrees did not educate him to the fact that the homeowner is selling the house in a short sale transaction, and not the bank! Those ever so powerful degrees, (which, by the way, are not in real estate), also did not help him to spell "foreclosures" properly. But we will conclude that you would not get his rebate if you were buying a bank-owned property for your rental portfolio.
Aren't the "best deals" in today's market going to be foreclosed properties? So you would not benefit from Mr. Felan's rebate if you were buying a good deal in today's real estate market, regardless of the price. ...And then he goes on to provide a link to a Justice Department web page, as if that would lend some credibility to his offer. It is interesting to note what can be found on that web page: Some states have banned (outlawed) the offering of a rebate to customers. (Maybe the others will soon follow.) One of the quotes from that page says: "If inducements (rebates) were allowed, they could lead to......behavior which would make us look unprofessional in the eyes of the public."
That is exactly what you are doing, Mr. Felan. Your ad sounds unprofessional. You didn't answer the person's question. Perhaps you don't know the answer. You were just waving a $500-bill in front of everybody, praying that a buyer would call you based on that ad. ~Most buyers would not choose the $500 savings over hiring an experienced Realtor. Most buyers don't give a hoot where you got your degree, or how many degrees you have. Most buyers are looking for a professional to represent them when they engage a Realtor, and they want someone with experience and a track record in Real Estate. They are not impressed with a degree in Education.
I would invite other Brokers to respond to this issue. This is a public forum, so throw your opinions out here. Thanks to all of you in advance!

Rick DeVoss

ULTRA Real Estate Services


---helping people sell Tarrant County, ...one house at a time...
0 votes Thank Flag Link Fri Jan 18, 2013
You need to contact a mortgage broker determine IF you can qualify owning 2 homes.

Lynn911 Dallas Realtor & Consultant, Credit Repair Advisor
Multimillion Dollar Sales Producer

Follow me on Facebook
0 votes Thank Flag Link Fri Jan 18, 2013
Dear Second Homeowner,

After reading all the previous answers, you may still be a bit confused. (Especially when people write in from out-of-state, not knowing the laws in Texas.) First, let me say it depends on what you are trying to do; and second, it depends on the lender. Since I am not a mortgage broker, I can just tell you what I have seen over the past 32 years. And then you have to realize that ALL mortgage lenders have changed their rules for underwriting in the past year or two. But you will find that some lenders will make the type of loan you are looking for and some won't. When you contact me, I will put you in touch with one who will.

But they are going to ask about what you are trying to do first. Are you trying to buy the second house right away; move into it at your leisure; and then find a tenant for your first house? IF that is your plan, you will need to qualify for two loans at once. There is no restriction on owning two houses; one can be your homestead, and the other can be a vacation home. You would have to make enough money to carry both mortgage payments based on your income-to-debt ratio. Few people can do this, but if you have an exceptional income and no other debts, it might work. (It depends on the price of the house.)
It will be a lot easier to accomplish if you rent the first house to a tenant, and then go out and buy your second house which will become your homestead. In this type of a scenario, the lender may not hold the first mortgage payment against you as a total debt. They may be willing to give you some credit for the rent as "income" to offset the debt of the mortgage payment on the first house. So now the math kicks in, because it depends on the size of the first mortgage payment vs. the amount of rent you can get in today's market. (You need an experienced Realtor to evaluate that for you even before you call a mortgage company.) Some lenders will give you a credit for about 70% of the rent money.
So now it becomes a question of convenience. (Nobody said becoming a Landlord would be easy!) You are probably thinking that you don't want to move out of your first house BEFORE you can buy the second one. Well, you may have to move twice to make this scenario work. You could rent an apartment for a month, for example. (You don't have to sign a one-year lease.) But many times in the past, I have assisted someone who wanted to do exactly what you are trying to do without them renting an apartement. You would have to present the lender with an executed lease agreement between you and your new tenant. In the good old days, we used to give the lender a "signed copy" of a lease. But in today's world, they will verify that you have a live tenant on the other end of the transaction. So before you can close on the second loan, you will have to present them with a tenant for your first house. This is not impossible, and I can show you how to do it.
Obviously, Timing is the key factor involved here. We can have a house standing by for you to purchase it, while we advertise for a tenant to take over your first house. The new tenant will have to be understanding and patient while we get your new loan approved. The key here is to have your second loan PRE-approved. That way it won't take us long to actually close on a house. --It would be ideal if you could rent your house to a relative or close friend, as they might be more understanding of the situation.
Ok. --Long answer. --But you asked a question about a complicated situation. When you get in touch with me, we will sit down and go over the numbers in detail, and I can show you exactly what the lender is going to look at -- even before you call a loan officer. You are very wise to start this project. Eventually, you will become a seasoned Landlord, and you can build up a repertoire of properties which will give you a solid retirement income. Soon, you will become a millionaire on paper!
Good luck to you!

Rick DeVoss

ULTRA Real Estate Services



0 votes Thank Flag Link Fri Jan 18, 2013
As long as your income can support the two homes and your other debts you would be fine. I would speak with a loan officer or broker to get an idea of what you can qualify for. Then make sure you are comfortable with that payment and debt. Just because a lender says it's OK does not mean you necessarily want to buy at the maximum you can support.

Best of luck to you.

Don Groff
REALTOR® | Mortgage Broker
Keller Williams Realty | 360 Lending Group
o 512.669.5599 m 512.633.4157
listings@dongroff.com | http://www.AustinListed.com
0 votes Thank Flag Link Fri Jan 18, 2013
Yes, as long as you can qualify for both homes. Give me a call and I'll help you. :)

K.C. Jones
RH Lending
0 votes Thank Flag Link Fri Jan 18, 2013
Morning Silence,

Take the good advice of the others, but when ready to buy give me a call. Use me as your agent and I will pay you a cash rebate of $500-$1,000 out of my commission!!! Restrictions are that the house must close above $100,000 and must be sold by an individual ( no forclosures, short sales, etc).

I am a twice degreed professional (TCU & UNT) ready to represent your best interests.

For information on how rebates are good for consumers, please see:


Will be awaiting your call or e-mail!!!

George D. Felan
Realtor, Ready Real Estate
0 votes Thank Flag Link Fri Jan 18, 2013
Good morning Silence
Great question! As others have said you definitely want to consult a loan officer for your specific situation. Generally speaking though there a few rules of thumb for you with purchasing additional property and holding on to the old one as rental property.

Cash to put down- Lenders are going to want to you to have an increased equity stake in the new home you intend to buy.

Cash Reserves- The lender will want you prove that you have cash reserves to cover vacancy in your rental property,

Debt to income Ratio- You will need to to have a debt to income ratio that supports both the new mortgage and the old mortgage as well and all debts. The lender also may not factor 100% of the rent as income, this amount may be reduced to factor a vacancy period between tenants.

There are additional items but these are the main three that really stop many potential investors. If you have additional questions or I can be of any service please feel free to contact me directly. Best of luck to you!

John Straub
Keller Williams Realty

0 votes Thank Flag Link Fri Jan 18, 2013
What it boils down to is your ability to carry both mortgages. A local loan officer should be able to assist you with this.

0 votes Thank Flag Link Fri Jan 18, 2013
Potentially, but you will need to qualify for both loans..... you just want to explain the situation to your loan officer and see if your income qualifies for both homes.
0 votes Thank Flag Link Fri Jan 18, 2013
Bruce Lynn, Real Estate Pro in Coppell, TX
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