Home Buying in 08043>Question Details

Seeker, Home Buyer in 08043

How much equity do I need to build and for how long do I need to wait before I can purchase a 2nd home?

Asked by Seeker, 08043 Fri Nov 11, 2011

Am planning to buy a townhouse for primary residence(in $200k range).Wondering how soon and after how equity, I can buy a 1 bed condo for renting it out and the best way to go about both in terms of down payment,qualifying for mortgage etc?Will paying a more down payment or increasing monthly mortgage payments on 1st house help?

Thanks for your response and time..

Help the community by answering this question:


Hi Seeker,

Paying more on your primary residence can actually hurt you in that you are depleting assets, which the bank wants to see (as in lots of assets). You will need two months reserves (PITI & HOA fees) for each property you own AFTER the purchase is completed. So save those dollars before you buy.

On an investment property purchase, you will need a minimum of 20% down for a conventional loan. You could look for a condo being sold by Fannie Mae using their HomePath financing program with just a 10% down loan program for investors with no mortgage insurance.

You can buy your primary residence & the investment property on the same day, or the next day. There is no waiting period.

Good luck on your purchases!

All the best,

Roswell Moore, CMPS
Certified Mortgage Planner
480-422-5095 direct

We are a Direct Lender, Mortgage Bank where we originate, process, underwrite, fund, AND SERVICE our loans, in-house, FHA (starting at a 580 score AND only 3.5% down), FHA Streamline loans (no minimum credit score, no appraisal required) Go Green rehab loans, HomePath, Investor Friendly (10 financed properties), VA, USDA, Jumbo, Conventional, plus, we allow Escrow hold backs!
0 votes Thank Flag Link Fri Nov 11, 2011
There's no time limit as you can buy it anytime, as long as you can carry both mortgages and associated carrying cost.

Marco Gomez
NYS Associate Broker
Keller Williams Landmark II
0 votes Thank Flag Link Tue Nov 15, 2011
You can buy a rental anytime, there is not a waiting period following the purchase of a primary residence. If you are asking how to accumulate multiple properties calling them all primary residences then the period is one year. Most mortgages define what is required to meet the standard of primary residence. If that is not your intention and you just want to purchase a rental property straight up, you probably need 20% down. It is difficult to get PMI on a rental property. Hope this is helpful,
0 votes Thank Flag Link Fri Nov 11, 2011
Seeker, suggest you speak with your lender. If the new purchase will be considered your primary residence requirements will be different than if it will be an investment property. In addition if current home is leased lender will likely only count a portion towards your income for qualifying purposes. In general it has been easier to buy for personal residence than investment and of late the banks have really tightened up. you may want to reconsider the order of purchase getting what will eventually be investment home first (calling it your primary residence, then moving up to the larger)
0 votes Thank Flag Link Fri Nov 11, 2011
The game changes completely when you are buying property that is not your primary residence.
After you are in the property which will be your primary residence, make sure all your payments are on time.
Once you have this debt, remember it will have a large impact on your debt to income ratio. This is an important determining factor for qualifying for a loan. In my opinion, it's not the equity you have built on your first property, but the equity you will invest in the second property, that will make more of a difference. You always have to put more money down on a property that will not be your residence. The lender needs you to be "invested", in some way.
I am a Realtor, and not a banker or loan officer, but if I were planning this , here's what I would do. I would put down enough money on my residence to get a loan without PMI. That will lower your monthly payments. Having a prospective tenant who is willing to write a letter to the bank saying he/she will be leasing the property once you have closed is also very helpful. If you dont have that, then make sure you look to buy a property in a place that has a proven record of renting quickly. And that information is all on the MLS. A good Realtor will give you that information. It's wonderful to see someone who is planning on making investments in Real Estate. I wish you the very best. And of course, if you aren't working with an agent already, please contact me. 908-447-6980.
0 votes Thank Flag Link Fri Nov 11, 2011
If you can show the bank that your new townhouse purchase already has a lease in place which is enough income to cover all of it's monthly expenses (principal, interest, tax, insurance, association fees), and you have a 20% down payment, then you should be able to buy it at anytime. Without the lease and down payment, I believe you have to qualify using your own monthly income against all of your minimum monthly obligations to a 40% -ish debt ratio. All lenders have different guidelines though, so please just accept this as a generalization.

0 votes Thank Flag Link Fri Nov 11, 2011
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