Home Buying in Menifee>Question Details

becca.tibay, Home Buyer in Menifee, CA

I want to rent out my current house and purchase another. Do any lenders take rental income into consideration?

Asked by becca.tibay, Menifee, CA Wed Sep 4, 2013

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13
Rental income is typically factored at 75% of the lease or fair market value (whichever is lower). This is to take into account the taxes, insurance, vacancy rate and repairs which are real expenses of renting and deducted from the rent.
3 votes Thank Flag Link Wed Sep 4, 2013
Yes, all lenders will accept rental income on a departing residence in order to help offset the PITI payment and keep your DTI ratios low enough for you to qualify for a new home....but only IF you have enough equity in the home.

Fannie Mae & Freddie Mac (Conventional financing), FHA, VA, and USDA put in place certian equity requirements/guidelines to prevent borrowers from 'buying and bailing' years ago (2008/2009)

How much equity you need in your current home depends on the type of financing program you are using to purchase your new home.

==> Conventional financing requires 30% equity
==> FHA/VA/USDA financing require 25% equity

These are hard and fast written guidelines. Direct lenders, banks, brokers cannot just choose to ignore these requirements if they plan on underwriting to the agency guidelines, so it would do no good to call 20+ different lenders asking if they 'special' guidelines to allow this.

With our expanded DTI ratio guidelines, I have been successful in qualifying borrowers with both their current and new mortgage payment. if you would like to discuss if this is a possibility for you, just call (951) 215-6119.
2 votes Thank Flag Link Wed Sep 4, 2013
Yes, it is considered. Call if you would like more information and I will connect you with an expert in the field. Regards
2 votes Thank Flag Link Wed Sep 4, 2013
Yes, they all do. All you have to do is rent out your house for two years and show the income on your taxes.

J.R. Thrasher
http://www.SanDiegoRealEstateVeterans.com
619-929-0105
1 vote Thank Flag Link Thu Sep 5, 2013
We use 75% of rental survey on departing residence with a rent survey (no rental agreement or deposit check necessary), and whithout landlord history/experience. ...you do not need 2 yrs of tax returns
Flag Thu Sep 5, 2013
I can certainly help you out there. You can call me at 408-352-5147 or email me at AGreer@themortgageoutlet.com. You can check us out at http://www.TheMortgageOutlet.com. I will look at your situation and present you with some options.

Alex Greer
NMLS #1056079
1 vote Thank Flag Link Wed Sep 4, 2013
Our “Departing Property” program allows home buyers to get pre-approved, make an offer and hopefully purchase a new house before selling or even listing their current residence. (Who would want to sale their house before having a new home to move their family into, in this multi offers market?)

In order to help our buyers qualify carrying both houses we underwrite the new loan offsetting the departing property’s housing expenses = Principal, Interest, Taxes and Insurance (PITI) in either of the following two ways;

Departing Residence Retained For Rental – Offset departing residence’s PITI with 75% of future lease!

• We use 75% of rental survey on departing residence with a rent survey (no rental agreement or deposit check necessary), and whithout landlord history/experience.

• We do not require a minimum 30% equity to offset PITI with rental income. However, property must not be underwater (Cannot owe more than the departing property is worth).


Departing Residence Listed/Not Sold – Will not count departing residence’s PITI in debt ratio!

• Need listing agreement (property on MLS not required)

• Borrowers must have an additional 6 months liquid PITI reserves on the departing residence (does not apply if departing property is in contract)

• HELOC or private money loan on departing residence okay in order to make the down payment on new residence (but payment must be considered in the 6 months reserve requirement above unless the departing property is in contrat)

Call for all details.

Thierry Abel
Senior Loan Consultant
All California Mortgage
A Division of APMC
P: (415) 464-8261
E: tabel@allcalifornia.com
NMLS 304353 - DRE 01380701
1 vote Thank Flag Link Wed Sep 4, 2013
This is a great question for a lender. Bob and Scott from Tri Emerald will be able to give you all the details. You can reach them at Bob.Krowel@triemerald.com or ScottChristian @triemerald.com.

All the Best!

-Ryan Smith
1 vote Thank Flag Link Wed Sep 4, 2013
Yes, you can use future rents to qualify. Are you purchasing a new house with 5% down or more? Email or call me and I can navigate you through this.

Valli Lopez
NMLS 980530
619.916.9595 cell
Valli@thebrikhogroup.com
1 vote Thank Flag Link Wed Sep 4, 2013
Rtibay,

When Departing Residence is Retained For Rental – We can offset departing residence’s Housing expenses (PITI) with 75% of future lease!

We use 75% of rental survey on departing residence with a rent survey (no rental agreement or deposit check necessary), and without landlord history/experience.

We do not require a minimum 30% equity to offset PITI with rental income. However, property must not be underwater (Cannot owe more than the departing property is worth).

Cheers,

Thierry
0 votes Thank Flag Link Mon Feb 24, 2014
Hello,

I routinely deal with this scenario and yes, the rental income can be counted, however, if you are getting an FHA or a conventional loan to buy your new home there are conditions that must be met regarding the equity in the home that you are departing. You definitely need a lender experienced in this area to show all the options and make sure that you do not misstep. Even within the two types of conventional loans (Freddie mac or Fannie Mae) there are differing guidelines for this relating to landlord experience or lack thereof.

I am available to help you at your convenience if you wish.

I can do a full underwriting approval ahead of time if need be and I also offer credit score improvement programs for free while we work on your mortgage.

If you like my answer above, consider clicking on a “Thumbs Up” or “Best Answer”

Regards,

Robert L. Hanson
Gladewater National Bank
First Time Homebuyer Specialist

Direct: 240-752-7549 Cell: 301-651-7822
Email: robertlh66@verizon.net
NMLS# 695929

Rate quote or live chat with me at the link below:

http://www.loansfromrob.com/quote/
0 votes Thank Flag Link Mon Feb 24, 2014
Yes...You will need to provide rental agreement and new renter's first month deposit
0 votes Thank Flag Link Mon Feb 24, 2014
Yes, when lenders look at your finances they include rental income as well. It seems by your question though that you plan to rent out your current house after you buy the new house. In this case, you can't show them rental income that you haven't made yet when you are buying the new house. Also, your ability to buy a house not only depends on income but other factors as well. These factors include credit scores, expenses, assets, liabilities, debt, along with income. I would recommend talking to a lender like myself. I would be glad to talk with you so I can try my best to get you the loan that you need.

Well I hope this helps! If you have any further questions or if you need a loan, feel free to contact me. Also, if you found this helpful please leave me a recommendation if you can!

Good Luck!

Brian Nguyen Sr.
Mortgage Banker
NMLS # 659743
Phone: 949.667.2887
brian.nguyen@nafinc.com
0 votes Thank Flag Link Mon Feb 24, 2014
We do not require a minimum 30% equity to offset PITI with rental income.
However, property must not be underwater (Cannot owe more than the departing property is worth).

Call for all details.

Thierry Abel
Senior Loan Consultant
All California Mortgage
A Division of APMC
P: (415) 464-8261
E: tabel@allcalifornia.com
NMLS 304353 - DRE 01380701
0 votes Thank Flag Link Wed Sep 4, 2013
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