This is a great question. Recently, increasing number of borrwors come up to tell me that they are interested in buying a bigger home and and rent out their current property. Until very recently, once it is past underwrite "smel test", like it is in fact bigger than your current property, or close to your work.ect,...you are approved with a new mortgage with leasing agreement for your current resident. However recently, Fennie and Fredi have come up with a regulation that in order to purchase another bigger property as your primary, your present home value must have at least 30% of equity, and you would acceptable reason to occupy the new one for your primary. However, FHA also, does approves it without this policy, and it is easier to get approved. It would be complicated if you have FHA on your current home.
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Good afternoon. This statement is both true and false. It will depend on which bank and program that you choose. If you go regular conventional they will require you to have a paper trail for anywhere between 6-12 months of rental income. I did finished a loan up where I had the same scenario and I took him through FHA. The bank required a lease and a copy of the canceled deposit check for the rent. Please let me know if I can be of further assistance. Thank you and good luck
You will probably be best with an FHA loan. Freddie MAC & Fannie Mae guidleines just change effective Aug 1st- they require that the borrower have 6 months payments in reserves for BOTH mortgage payments AND 30% equlty in the rental property.
FHA requires a tenant under lease, and then can count 75% of the rent amount as income. There are loan limits on FHA, however. Not sure the price of the new home.
Bottom line: get a better lender! A good loan consultant will find you the best product for you.