Home Buying in 95829>Question Details

kimanuel2, Home Buyer in Sacramento, CA

MY DEBT TO RATIO IS 63 .TRYING TO GET A LOAN ON A 239,900 HOME . I CAN PUT DOWN 50% . WHAT IS MY PROBLEM IS I PLAN TO RENT MY CURRENT HOME OUT.?

Asked by kimanuel2, Sacramento, CA Fri Jan 18, 2013

AS OF NOW IT'S COUNTING AGAINST ME. IS THERE LOAN OR LENDER THAT WOULD FUND LOAN.

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11
Shane Milne’s answer
Hi Kimanuel,

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
1 vote Thank Flag Link Fri Jan 18, 2013
Ya payoff your dept down. There are some programs only requires%5 down with no MI..let me know if you need further help..
0 votes Thank Flag Link Sat Apr 19, 2014
May be better off paying down a lot of your debt & putting down less on the house.
0 votes Thank Flag Link Sat Apr 19, 2014
kimanuel2 - calculating a borrower's DTI isn't always straight forward, there are a variety of factors that need to be analyzed in this process....if your CORRECTLY calculated DTI really is 63%, the only way you'll get an approval is going conventional, and putting a huge down payment (like 50%) and have several years of reserves...

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
916-947-1312
NMLS # 275846
0 votes Thank Flag Link Sat May 18, 2013
so you,rbuying a Non owner occupied, do you have any equity in your current home,,you would need between %20=30 in ordor the income to be considered and from that income only %75 considered as income,,but if you,r putting %50 down you could always get a PRIVATE money loan and pay interest only for 5 years by then you could REFI,,let me know if you have nay questions,,I could be reached at 714-743-9444,, thank you.
0 votes Thank Flag Link Thu May 16, 2013
A lender for the most part won't count that rental income and hence the problem.
0 votes Thank Flag Link Wed May 15, 2013
I have several sources that will work with this. Please feel free to send a private message here on Trulia or to eddie@bhrparkplace.com.

EM
DRE#01324382
0 votes Thank Flag Link Wed May 15, 2013
Regarding loans, it's simply on a case-by-case basis as the guidelines are changing so frequently. However, with 50% down, you should be able to find one.
0 votes Thank Flag Link Tue Jan 22, 2013
The debt to income ratio needs to be around 50% for all debt. They aren't going to count the income of the rental until after there's been some history of receipts and even then only 70%.

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,
0 votes Thank Flag Link Sat Jan 19, 2013
Kim: Purchase the home as a rent/non owner occupied and you will alleviate your DTI problem.
0 votes Thank Flag Link Sat Jan 19, 2013
Yes.
I have a lender for you.

Please give me a call or email

Michele Peterson
Keller Williams Realty
(916) 743-5934
CallMichelePeterson@gmail.com
CA DRE 01872795
0 votes Thank Flag Link Fri Jan 18, 2013
what type of loan would it be. my fico scores are above 800
Flag Fri Jan 18, 2013
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