Home Buying in Sterling>Question Details

Kim, Home Buyer in Ashburn, VA

I want to rent out my current home and use that income to buy a new house. Is there any lender out there only need to see the rental lease?

Asked by Kim, Ashburn, VA Thu Feb 21, 2013

Help the community by answering this question:

Answers

11
Kim,

Yes you can do this but you will need 30% equity position in the departure residence,a signed lease agreement, and proof of deposit from your tenant.


Chris Irvin
Mortgage Banker
Brand Mortgage
NMLS # 75615/465546
678.251.7889
cirvin@brandmortgage.com
http://www.chrisirvin.com
0 votes Thank Flag Link Tue Apr 2, 2013
after the loan goes through, are there restrictions on selling the rental property?
Flag Tue May 13, 2014
Hello Kim

I am in the same situation you are, I already own a home and want to buy another. Let me tell you how I am going to do it. As you might know, we have a small window of opportunity each year before tax time. For me, I knew I wanted my rental income to offset my mortgage, therefore making it easier to qualify rather than the Underwriter hitting me with both payments. With Conventional financing, the lender will be looking for a two year landlord history. Since I couldn't provide that, my next best loan program is either FHA, VA or USDA. With either one of these programs, as long I claim at least one month of rental income on the previous year's Federal Tax Returns, I can use the the rental income to offset my mortgage. Depending on the LTV of my current mortgage, the UTR has the discretion to use up to 95% of rent to cover my mortgage or as low 75%. Hope that helps you.

Best of Luck!
Web Reference: http://www.AFN-Loans.com
0 votes Thank Flag Link Thu Feb 21, 2013
Hi Kim:
Lenders are being very careful with whom they approve for a loan. You should look for a good lender, not a broker please, they are a headache to work with and not very trustworthy. There are many variables the lenders look at, like income, credit, debts, reserves, etc. Every case is different, but lending practices are more or less the same. Good luck!
0 votes Thank Flag Link Thu Feb 21, 2013
Thanks all for your input.
0 votes Thank Flag Link Thu Feb 21, 2013
Hi Kim:
I would speak to a lender. All situations are different and there are a lot of variables involved. Take care.
Carol
0 votes Thank Flag Link Thu Feb 21, 2013
Kim,
As a rule of thumb a lender may want you to have at least 30% equity in the rental property before they can consider the rental income as income, therefore an appraisal will be required. If you don’t have that equity your current income will have to cover the new mortgage and also any payments still existing on your current home. This can throw your debt to income ratio too high to qualify for a mortgage.
0 votes Thank Flag Link Thu Feb 21, 2013
Detailed financial information is a must these days. Newer laws have made erquiremnets for loans tighter and more contigent of the financial health of the borrower. Also, in a certain way, the rental lease isn't solid income insomuch as it relies on a third party with whom the bank has no direct connection. Kind of parroting the information from earlier, but hearing the same information from different sources usually indicates some level of truth.
0 votes Thank Flag Link Thu Feb 21, 2013
You can not use the income From your current rental property until It has been rented for one year. This means that when you purchase a new home and rent out your old home you have to technically afford both payments. Only a lender will be able to assess your situation. I've worked with many clients in your situation and unfortunately your rental income the first year will be counted as a debt for the first year. After one full year of renting you can claim that rental income as income when purchasing a new home. I'm not a lender I am a Realtor but all Realtors should know this. I believe this is been the law for a long time and is not a new guideline. The reason for these guidelines is to avoid properties to go into foreclosure In case you're unable to rent the other property for any reason Such as a fire or natural disaster.

Stephane Allinquant
Realtor - Certified Negotiation Expert
Keller Williams Realty
of: (703) 679-1353
c: (301) 580-0670
http://www.LifeLibertyLand.com
Stephane@LifeLibertyLand.com
0 votes Thank Flag Link Thu Feb 21, 2013
Yes Kim i can provide you with lenders information that can help your specific situation, however the lender will have to look at your entire financial situation before being able to provide you with a loan, gone are the days of No document loans, if anyone is telling you they can get you a loan just by looking at your lease Beware.
Aziz

Aziz Nawabi
Multilingual
Sales Associate, (SRES) Certified
http://www.agenttrusted.com
Fairfax Realty
950 Herndon Parkway
Suite 120
Herndon, VA 20170
Cell 571-214-2265
Off 703-766-9800
Fax 571-434-0019
nawabiaziz@gmail.com
0 votes Thank Flag Link Thu Feb 21, 2013
HI Kim.

I have a lender that would be more then happy to look at the entire picture and help make sure you have all of you "ducks in a row" prior to finding your next home. We help clients like you all of the time rent their current properties and help secure your new homes. Let us know how we can help!

Best,
Andrea
Schatz Hayes Homes/KW
andrea@schatzhayeshomes.com
571 384 8752
0 votes Thank Flag Link Thu Feb 21, 2013
I do not know of any lending institutions that would need to see the lease only. The lending criteria has become very strict over the last seveal years. I believe they would need to see a credit report in addition to full financial documentation.

Sincerely,

Roger
0 votes Thank Flag Link Thu Feb 21, 2013
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer