Financing in 29154>Question Details

Kelly, Both Buyer and Seller in Sumter, SC

How does renting out the home I currently own affect my ability to get a home loan for another home?

Asked by Kelly, Sumter, SC Wed Oct 29, 2008

My husband is military and we want to rent out our current home as an investment. We are moving across the country soon and want to buy a new home there but I'm worried that we will have a hard time getting another mortgage with a good interest rate. We have great credit. We plan to have the first house rented out before buying the second house. Thanks for any help!

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If you're looking for an FHA loan or plan to work with a lender which sells its loans to Fannie Mae, you won't be able to count the rental income towards your qualifying income unless you can prove 30% equity in the home to be rented.

Without the 30% equity, you will be required to prove 6 months' worth of reserves for mortgage payment, property axes, home owner's insurance and association fees (if applicable) for both houses.

This is a result of FHA's and Fannie's policy to prevent "Buy & Bail" tactics by home sellers.
1 vote Thank Flag Link Wed Oct 29, 2008
You must have 30% equity in the property and 6 months of PITI for both properties held in reserve. Otherwise, you will have to be able to show you can afford both mortgages.

I am a Loan Officer. If I can be of assistance, please let me know.

Martin.Smith@Emeryfed.com

Martin
0 votes Thank Flag Link Tue Jun 9, 2009
I work in Sumter. If you would like any advice on which property management company to use I would be happy to assist. You can call me at 803.983.5546.
John Hilton
Hilton and Co. Real Estate Consultants
0 votes Thank Flag Link Mon Jun 8, 2009
Hi Kelly - You best bet is going to be to talk to a local lender that can lend in both states so you may need to talk to Bank of America, Wells Fargo or someone like that. If you have a signed lease, they will many times be fine with that as long as you have good credit and money to put down on a new home. You will also want to check in with a property management company and find out there fees as managing a rental from across the country will be very difficult. They usually charge in the 8-15% range. If you need a realtor in yoru next destination please let me know, I would for Carolina One Real Estate in Charleston and we have a great referral program through The Leading Real Estate Companies of the World. It enables me to help clients, friends and family find qualified agents anywhere in the country. A great agent is so important in today's market.
0 votes Thank Flag Link Wed Oct 29, 2008
1. With a VA you can only have one at a time- SO if your current home is a VA loan you will not be able to get a VA on the new home-
2. If you have good credit, there are loans out there, FHA with 3% down is the one being used the most today, but Conventional loans can still be gotten with 5-10% down, you will need good credit and reserves though. Both conventional anf FHA have good current market rates so rate shouldnt be a problem with your good credit.
3. The rental question, if you rent you current home you will have the payment counted against your income, BUT 75% of the rental income will be added back to your income to help of set the payment.
Good luck with your move!
Jim Cavoto
Nations Funding Source, Inc
Nationwide FHA, VA and Conventional Lending
720-309-3014
Web Reference: http://mortgageetc.info
0 votes Thank Flag Link Wed Oct 29, 2008
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