The way that current lending rules are stated is basically as such:
* You must have a 25% -30% equity stake in your current home if you are going to make your primary home a rental for purposes of qualifying for a mortgage
* You will be allowed to use 75% of the rental income (lease agreement in your case) to offset the mortgage specifically. This will help with you rdebt ratios.
* The value of your current home will probably need to be justified with a full appraisal. Possibly an underwriter could use a market valuation model if your mortgage is very minimal.
The reason for these new rules is to prevent a process called "buy and bail" whereby a buyer gets a fake lease agreement to qualify and owe equal to or more than the home is worth on their mortgage. After they buy their new home, they let the prior home fall into foreclosure.
I know it sounds like a stretch, but it is more common than you think.
Call me if you have questions.
First check with a mortgage professional to see what loan programs you qualify for and then if you are staying in the area any Realtor can provide you with the comps for your current home as a rental property.
Ask a real estate agent for comps. They'll be able to tell you the going rental rate.
Do you have a lender that you regularly work with? Ask them about their programs, and they'll tell you exactly what you need to do. If you don't have a lender, I can recommend a few great ones in our area. Let me know if I can help out further.
Just had a client get an approval to purchase a home and one of the stipulations is that he has to have a lease on his current home. The lender will be able to tell you the exact requirements of the lease -- but, in some instances it can be done. If you need a lender referral, I have a great one and would be happy to give you his number. It's worth checking it out and see if it could work for you. As you know, every case is different. Feel free to contact me - 703-509-4199. Carol