When you are moving out of your current home, and want to rent it out and use that income to qualify, then there are certain requirements depending on the loan program you are going to use to purchase the new home.
If you are going to use FHA financing, then to use the future rental income from the home you are living in, you are going to either need to have 25% equity or you are going to have to be relocating to a new area that isn't within commuting distance of your current home.
If you are going to use conventional financing, then to use the rental income from the home you are living in, you are going to need to have 30% equity.
In either situation, you will need to have a signed rental agreement & evidence that you have received the security deposit and/or the 1st months rent.
Do you not have much equity in your current home? Since you have so much of a down payment on the new home, you may want to consider paying down your current mortgage balance to where you would have the 25% or 30% equity, and then put a smaller down payment on the home you are buying. Or if you are relocating to a new area not within commuting distance, then you can use FHA financing and not need the 25% equity in your current home.
Shane Milne | Lending in all 50 states | NMLS #81195
If you'd like a 2nd opinion on your DTI, and loan approval status, feel free to contact me!
best regards, Jeff Marr
Alpine Mortgage Planning
NMLS # 275846
It sounds like you're talking about qualifying for a loan of $120,000 (since you're putting 50% down). That makes your loan to value ratio very nice but you need to be able to demonstrate that you could cover both mortgage payments with your current income. You may just need to qualify for a lower loan amount.
You could go with a hard money lender but the interest rate would be higher, and you're not saying that your credit score is low so I'm not sure that would help.
In any case, I personally prefer my clients work with local lenders. It makes the transaction move easier and the ones I know are sensitive to the timelines of the contract. I've mentioned some on this site before. If you'd like a complete list just contact me but I think your real restriction is whether they are giving you any credit for rental income on day one, I am assuming they are not,