Home Buying in Chicago>Question Details

Christopher…, Real Estate Pro in Hillside, NJ

Renting out my current home to buy a new one. What would I need to qualify?

Asked by Christopher O'Malley, Hillside, NJ Sun Jan 5, 2014

I own a townhouse in a Chicago suburb. It's been rented out for the last 9 months and will most likely sign a two year at the end of this lease. I recently refi'd it and will be making about $50/mo more in rent than what I pay for the mortgage and HOA. The townhouse is worth about $145K and my recent refi was for $159K. My wife and I currently rent a place in the city but would like to build a home over the next year or so. The new home would be approx. $325K. I have 740 credit and make around $120K/yr. Wife has good credit, she's self employed bringing home $70K/yr. What are our options? Do I need to show a specific period of rental income? Any idea what I could qualify for? Any insight is appreciated.

Help the community by answering this question:


Mr. O'Malley,

There are specific questions that need to be asked and answered, credit to be pulled, debt to income ratios to be calculated, but based on your narrative, it would seem highly likely that you would qualify for the new mortgage that you want.

Let's go over the numbers tomorrow. Please give me a call at your earliest convenience. I can be reached at 773-416-7107.

Or, if you'd like, you could go to my website at http://www.mattbukovy.com and fill out an online application.


Matt Bukovy
Senior Mortgage Consultant
Wintrust Mortgage
1 vote Thank Flag Link Sun Jan 5, 2014
You need to get yourself prequaified.

As per how much you qualify for it all depends on how much rental income and self employment income (wife) is shown on your taxes. It also will depend on how much you plan on putting down as a down payment.

Feel free to contact me at anytime to discuss further.
Web Reference: http://www.BJDLOANS.com
0 votes Thank Flag Link Thu Mar 20, 2014
Talk to a mortgage broker, they will be able to guide you in the right direction. Finding the right mortgage broker is like finding the right taylor. Once you find a good one, stick with them.
0 votes Thank Flag Link Fri Jan 10, 2014
A lender is the best person to answer this question. I would suggest speaking on the phone or face to face. Good luck!
0 votes Thank Flag Link Fri Jan 10, 2014
This question will best be answered by a Mortgage Broker.
0 votes Thank Flag Link Thu Jan 9, 2014
Great question email me at jmichaels@remax.net
0 votes Thank Flag Link Thu Jan 9, 2014
It will depend on if you plan on declaring your rental income in your tax returns, if it declared you can work off it with what the bottom line of what your Schedule E states plus added back depreciation in most cases.

However, the overall picture will need to be painted with a items related to your current liabilities to help formulate a proper debt to income ratio.

Feel free to contact me if you have any questions or would like another set of eyes on your situation.

Chris Diamond
Diamond Residential Mortgage Corporation
NMLS 771882
0 votes Thank Flag Link Wed Jan 8, 2014
Please, please ask your mortgage lender all these questions. I had an experience recently where a buyer refinanced their home and had a very hard time getting a new loan. I was told that banks are very wary of this situation. Having said that, if you are up front with a reputable mortgage lender and give him all these details then you should find the right advice.
0 votes Thank Flag Link Mon Jan 6, 2014
I doubt that your t-house is worth 145K if you refied it for 159K, but my web site has some lender references. Give them a call and see what they can do.
0 votes Thank Flag Link Mon Jan 6, 2014
I can recommend an mortgage person for you. Please give me a call at (708) 429-5300 when you get a chance.
0 votes Thank Flag Link Mon Jan 6, 2014
Mr. Omalley,

Every bank has its own guidelines and credit requirements. I suggest you speak with three lenders and focus on the one who will be with you throut the whole process. If you need suggestions please let me know. Good luck!
0 votes Thank Flag Link Sun Jan 5, 2014
hi. I agree you should talk to a lender. Rules keep changing. However, you seem to qualify for a loan at first glance. Some things you should know........Some builders will hold the construction loan and some won't. That means you pay the builder installments along the way. At closing you can take on a clean new loan. So maybe hurry while rates are still low.
Also, sometimes builders own a subdivision or a plot to build on. You should know that most banks will not loan money on vacant land. If they do, and they are few, it would be a local community bank. The idea would be to pay cash for the land if you can.
A lot of realtors haven't dealt with new construction- use one that has and definitely use a reputable builder. Be aware that no matter what the estimates are, you can expect to spend 10% more along the way and it always takes longer than you would expect to finish the house. If you have any questions, please consult me privately. I will be happy to answer any questions that I can.
Karen Feldman
0 votes Thank Flag Link Sun Jan 5, 2014
Give me a call when you have a chance. We can discuss your options.

0 votes Thank Flag Link Sun Jan 5, 2014
Call a lender up. This will be the easiest way to figure this out.
0 votes Thank Flag Link Sun Jan 5, 2014
The rules used by Fannie and Freddie are always changing.
The best thing you can do is contact a lender/loan officer to go over your income to see what y would qualify for. With the new rules coming out on January 10 th it is very important to get guidance from a qualified loan expert. Good luck in your pursuit of a new home.

Steve Smither
Senior Loan Originator
One Mortgage INC
847-942-5151 cell
847-963-1000 office
0 votes Thank Flag Link Sun Jan 5, 2014
There are a few ways to look at this - in order to use te rental income to off set your debt ratios you will need to file your taxes for 2013 and show the rental income. Because this is only part of the year this may not help much but you will want to speak with a lender to determine your eligibility. Otherwise if you can qualify with both the current mortgage as well as you new mortgage then this would not be as much of a concern. With your current situation as well the fact that your wife is self employed I would highly recommend speaking with a qualified lender sooner than later. I would be happy to help and I am available 7 days a week.
Sam Sharp
Senior VP of Mortgage Lending
Guaranteed Rate
0 votes Thank Flag Link Sun Jan 5, 2014
Based on your income compared to the amount of loan you are talking about, it sounds like you may qualify to carry both mortgages. I would need more information regarding your monthly payments on your current debt, length of employment, and other factors to know for sure. You definitely need to have an in depth conversation with a mortgage lender to know for sure. Feel free to contact me at your convenience.

Matthew Roder
VP of Mortgage Lending
Guaranteed Rate
0 votes Thank Flag Link Sun Jan 5, 2014
Hello Mr. O'Malley,

Contact Kelly Price, 773-501-6653, kprice@wintrustmortgage.com or Sam Sharpe, ssharp@guaranteedrate.com, they are lenders and can give you a better sense of direction.

Another option would be to buy a home in need of repairs to make it your own, instead of building from the ground up, which can also be done as long as the foundation is in place, then a 203k loan would be ideal. The 203k affords you money to purchase and renovate. For this I suggest you contact Chris DePaepe, Guaranteed Rate, chrisd@guaranteedrate.com.

Good luck!
0 votes Thank Flag Link Sun Jan 5, 2014
You should talk to a good mortgage lender or broker.
I suggest
Beth Lewis
Vice President of Residential Lending, PERL Mortgage
847.964.5533 Office | 847.964.5633 Fax
500 Lake Cook Road, Suite 420 Deerfield, IL 60015

I have worked with her for years.
0 votes Thank Flag Link Sun Jan 5, 2014
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