Is it possible to obtain Conventional home loan if current FHA home is used as rental?

Asked by Confused about moving forward, Redlands, CA Thu Apr 11, 2013

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Gregory Touc…, Agent, San Antonio, TX
Thu Apr 11, 2013
Why yes it is. You just have to have owned the property for the correct duration of time and fall within the debt to income ratio required to qualify for the new home. You will more than likely need to have the renter in place in order to get final approval for the loan so the lender knows that the debt is covered.

You would have to have a relative or very good friend to stay with until you get the renter, or some sort of living arrangement in order to have time to place the renter, but this increases the time you have to find the right place for you.

Any more questions? I am here to help.

Gregory Touchstone
Keller Williams Realty
1 vote
, ,
Thu Apr 11, 2013

You will have to qualify for the Conventional loan which is a little tougher to do than FHA since the down payment requirement is a little higher and the guidelines to qualify are a little bit higher.

But the fact that your rental is FHA will not affect you qualifying for a conventional loan.

Let me know if I can help!

Cell: 830-237-8296
0 votes
Anita Reeves, Agent, San Antonio, TX
Thu Apr 11, 2013
Yes. FHA only loans on owner-occupied houses, so one cannot use the FHA loan to buy a house that is meant initially to be investment property, but people move, lives change, and sometimes, it makes more sense to rent the house than sell it when circumstances require one to leave. If it was less than a year ago, be sure this is a legitimate change of circumstance. That being said, you absolutely cannot use FHA for more than one mortgage at a time, so you would be obliged to go conventional for the next owner-occupied house. Conceivably, you could use that one as a rental, but the lender will want to know up front which purpose you have in mind - they have greater risk on rental property, and will most likely charge a higher interest rate than for an owner-occupied house..
0 votes
Vino Alonzo, , San Antonio, TX
Thu Apr 11, 2013
This is possible, but there are several factors that a lender must consider in determing your qualification. For Example:

1. Can you qualify for both mortgages and your current debt and maintain a debt ratio not to exceed 45%
2. Do you have a history of renting the property previosly? (tax returns are used to verify this rental income)
3. Is the home with the FHA loan your current primary residence
4. Do you have sufficient reserves for both properties

I would advise you to consult with a Loan Officer (I am a Loan Officer) about your specific situation.

Contact me at your convenience.

Vino Alonzo, Loan Officer
NMLS# 184279
Castle & Cooke Mortgage
0 votes
, ,
Thu Apr 11, 2013
Yes it is.....
There may be some caveats depending on your file.... So you need to do a full application with a loan officer and see if this is doable for you!

Good Luck!!

Tom Burris
Mortgage Banker
(214) 763-4629 cell/text/nights/weekends(Really!!)
Lending all across the entire Great State of Texas!!
NMLS# 335055
Search Dallas area MLS for FREE. No registration =>
0 votes
Gregorio Den…, , San Diego, CA
Thu Apr 11, 2013
Are you looking in Texas of in California?

Aside from the length of time you have occupied the current property, the biggest question is if you can afford and qualify for both payments and if not, can the rental income be used to help you qualify. The answer to the second part lies in the amount of equity (if any) you have in the current property. To secure new conventional financing, you would need to demonstrate 30% equity in the property you are vacating in order to use any of the rents.

Consult a licensed loan officer in the state where you wish to repurchase.
Web Reference:  http://TripointMortgage.Net
0 votes
Carl Henker, , 95928
Thu Apr 11, 2013
It is possable if you have owned your current home for more than one year. If you havent' then you will have an issue with your new loan. You signed a one year occupancy agrement when you purchsed as an owner. If it has been more than one year you should be fine.
0 votes
, ,
Thu Apr 11, 2013
Yes, it is possible provided your debt to income ratios are acceptable. How much do you owe on the current FHA property and what is that home valued at? Are you just moving out or have you vacated the rental property already? These are a few important questions that will need to be addressed. If you like you can call me at 210-789-2870.

Good luck,
Jon Nichols
0 votes
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