I want to rent my townhome out and buy another home? Not sure what I need to do 1st, 2nd or 3rd? Get qualified, find a home, then rent. Please help!

Asked by Tamika Gray, Rex, GA Sun May 15, 2011

Can you be qualifed for another home with out having a renter for the 1st home?

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Sherry Mezze…, Agent, Alpharetta, GA
Sun May 15, 2011
Definately speak with a lender first. In times past you could rent your current home in order to cancel the mortgage debt but guidelines have changed in lending. Depending upon your equity in your current home you may have to rent for a full year before your current mortgage debt is not counted against you in your debt to income ratio. I highly reccomend my loan officer Mike Willanzheimer with Metlife Homeloans. He is super reputable and knowledgable. He also really takes the time to explain the process and your options. You may reach him at 678-428-8399. Once you are ready to purchase please give me a call. I am very familiar with Rex as I spend lots of time at Fort Gillem.
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Darrell Hess, Agent, Asheville, NC
Sun May 15, 2011
Very possible goal depending on your income to debt ratio, credit score, and of course available funds for down payment. Your challenges in this is most likely all lenders will require 20% down payment or 80% LTV if the new homes has less bedrooms or sq footage then the towne home you live in now. You have to prove that it is a move up purchase. The reason is you will be hard pressed to convince the people who buy mortgages on the secondary market that you are planning to be owner occupied in the new home. In their eyes it is a investment purchase. The new rules require that you can provide 1-2 years proof that your townhouse is rented to qualify for income and that it is not your primary residence. This of course is the issues you may encounter, but you may not it really is loan broker who will take that risk.
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Shane Milne, Mortgage Broker Or Lender, South Jordan, UT
Sun May 15, 2011
When you speak to a lender, you should be prepared with:

1. How much you owe on your current mortgage
2. How much your home's value is (#1 & #2 will help determine if renting out your vacated home can use the rental income to qualify)
3. How much your monthly or annual income is
4. The sales price range of the new home you are interested in
5. How much of a down payment you want to put down
6. What your minimum monthly debt payments are (car, credit cards, student loans, etc.)
7. Any details about your credit (score, what is on it, etc.)
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Rodney Mason, Mortgage Broker Or Lender, Atlanta, GA
Sun May 15, 2011
Your first step would be to see if you qualify for a new mortgage. If you do in fact qualify, then finding a new home will be your next step. Renting out your home would then be the 3rd step.

There are many factrors that will go into whether or not you would qualify for a new mortgage. If you have an FHA mortgage on your current home, then you cannot get another FHA loan until that home has been sold or the loan paid off.

You will most likely have to qualify with both your current mortgage payment and the new one. In order to use a lease to offset your current payment, there are several requirements. First of all, you will have to have an appraisal performed on your current home that shows that you have at least 25% equity in the property. Many people will not meet that requirement. You would also need a signed 12 month lease and a documentation of where the tenant's security deposit has been deposited into your bank account. All of this would have to happen prior to you closing on a new home.

Rodney Mason
Sr Loan Officer / FHA 203K Renovation / HomePath Specialist
Prospect Mortgage
Atlanta, GA
(404) 591-2453
NMLS #151088
Apply Online at http://www.rodneymason.com
Licensed in AL & GA -
Web Reference:  http://www.rodneymason.com
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Michael Hamm…, Agent, Suwanee, GA
Sun May 15, 2011
Definitely speak to a mortgage lender, Tamika. You might find that you need a valid, signed lease for twelve months before you can get a clear to close. Here are a couple below you may choose to call or write and start the process. Please email or phone if you need some ideas on housing and/or property management. Good Luck!

Michael Hammond

Jay Posey
Your Mortgage Advisor
PHH Mortgage, Inc
Phone: 404-992-5462
Email: Jay.Posey@mortgagefamily.com

Chuck Ewing
Senior Mortgage Consultant
First Century Bank, N.A.
620 Hembree Parkway, Suite 100
Roswell, GA 30076
770.241.1700 Direct/Cell
678.623.0960 eFax
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Christine Lo…, Agent, Sterling, MA
Sun May 15, 2011
You can always consult with a lender to see if you can be pre-approved for a certain amount. As far as renting and buying. This is one of those tasks that almost need to be done simultaneously. You can't move out until you have somewhere else to go. Which means you can't rent it until you are out.
My question would be do you already have someone to rent your townhouse? If not, how are you going to be marketing it?
Honestly, my first priority (which is just a matter of opinion in this case) is I would speak to a lender to see if I need to show that rental as income before I can buy something else. Then you can set your 2nd, 3rd priority.

Good luck and I hope everything works out for you!!
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Suzanne MacD…, Agent, Morristown, NJ
Sun May 15, 2011
I think you got the order just right. First, get qualified for a new mortgage, then find a home, then, once you have a property under contract and have a very good idea of your closing date, find a tenant.

Find a good local mortgage professional and talk to them about your plan. I feel relatively certain it can be done, I am seeing people in my area do it. Home is underwater or they just do not want to sell in this depressed market, so they rent the current home and buy another one.
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