What are bank requirements to buy a second home and rent out the first in the same city? Purpose is to upsize home.

Asked by Loaner, Scottsdale, AZ Wed Jul 6, 2011

Currently have a home that is slightly underwater. Want to upsize. What are the bank requirements for loan approval for new home if say I am planning to rent out the first home.

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Bianca Benne…, Agent, Glendale, AZ
Fri Jun 21, 2013
You should be able to keep the first one as an investment, now depends when you purchased the first house. Please contact a loan officer.

Best Regards,

Real Estate Professional / Prestige Realty
Bianca Bennett / 602-570-7898
Website: http://www.InvestInArizonaHomes.com
1 vote
Erin Jones, Home Buyer, Chesapeake, VA
Tue May 28, 2013
I am in the same situation. My husband and I have grown our family, and outgrown our condo. It too is underwater. We have no problem making our mortgage payments, so it seems as though we can't get any help. Is there anyone in the Virginia Beach area that is a direct lender that will be willing to go the extra mile to find a solution to our situation???
1 vote
Todd Bookspan, Mortgage Broker Or Lender, Phoenix, AZ
Thu Jul 7, 2011
Good morning,

The bottom line is you will need to qualify with both your current mortgage payment and the payment for your new home. Since you are underwater, you will not be able to use the rental income from your departing residence to qualify. Some lenders may be be concerned with your loan since you mentioned you are underwater on your current home - that is not a problem for us. We are closing a large number of transactions each month for clients in your situation.

The key is that not all lenders are created equal with regards to debt-to-income ratios and how they appoach these transactions. We take a common sense approach as we are a direct lender.

Please let me know if you'd like to dicuss the details of your situation.

Best regards,
Todd Bookspan
1 vote
Max Cunningh…, , Scottsdale, AZ
Thu Jul 7, 2011
Dear Mr. Loaner; AKA Home Buyer in Scottsdale,
You already know banks have tightened the reigns on their lending guidelines, however there is still plenty of lending going on to qualified buyers...funny in retrospect, that banks ever strayed away from that model, but staying on point with your question...
Assuming your current loan is in good standing (no late payments during the last 12 months at a minimum) and your credit score is 640 or above and your income inclusive of 75% of the rental income will qualify to make the mortgage payment on the new primary residence and the soon to be rental property loan...and it wouldn't hurt if your last name is Kennedy, Rothschild, Disney, Gates (joking); you have an excellent chance of qualifying for a new loan on your next home and I commend you on taking this opportunity to capitalize on this market. There will be other guidelines that could come into play and really you should speak with an experienced Mortgage Banker, please note; not the BANK where you have your savings and checking accounts.
I would go into detail here and cite several examples of deals failing in the final days prior to funding, but I only have 3990 characters left at my disposal. Just accept that you will be better served by a mortgage banker...most will put your best interest first.
I want you to have the direct number to 2 such lenders...they have each gone the extra mile for clients of mine and neither of them stuff extra fees under the rug if you will. They absolutely will take care of you with honesty, integrity, and genuine concern, too.
In no particular order here...Janie Shelstrate @ The Lending Company: (602) 679-8735 and Lisa Mecl @ WJ Bradley: (602) 290-2177.
Call either or both of them and you will have that piece covered! Perhaps they may even know a fairly good Realtor to refer your way when you are at the point of zeroing in on a home.
Millionaires will be made in this market, so get focused and get going...and good hunting!
1 vote
Brenda & Ron…, Agent, Mesa, AZ
Thu Jul 7, 2011
It all depends on if it makes sense to the underwriter. Definitely talk to a few lenders...if you need some names give me a call. The lenders have been requiring that you are able to qualify for both homes even if you rent it out, this was to try to make sure people wouldn't do a strategic walk away after they buy the second home. They are also looking at the quick short sales after a purchase as well.

The new lender (in my experience) won't factor in the short amount and add it to your new loan. For one reason they want to be in the best possible position on the new loan and appraisals right now are usually not very "generous". But if you can qualify for both and you need a larger home or a home closer to work it should be just fine. If you decide to short sale the first home after your try to rent it out for a while then that may not be a problem... you should always check with an attorney on this and a tax accountant familiar with this also.

Kindest Regards,


Ron & Brenda Cunningham
West USA Realty
Ron: 602-499-0694

** Recognized in the Phoenix Business Journal as "One of the Top 50 Realtors in the Valley"
1 vote
Loaner, Home Buyer, Scottsdale, AZ
Wed Jul 6, 2011
Or say I decide not to rent it, but would like to get rid of it. Would the lender for the new home consider factoring into the loan, the difference to make up for the "short sale" of the first home. Ex. say first home worth 500k, but owe 550k on mortgage. Planning to purchase a 800k home (with 640k loan and 20% down). Would new lender (or even same lender as the first) loan up to 690k (the 640k jumbo loan of second home plus the 50k difference to make up for the short sale of the first home?
1 vote
Amy DeWiggins, Agent, Scottsdale, AZ
Wed Jul 6, 2011
A lender is your best bet on the many programs offered... each situation is unique. If you have a lease agreement for your current house in place, you could use that monthly income to offset your debt ratio. I would be happy to assist you in your home buying process should you need an agent specializing in Scottsdale. Call or email anytime!
1 vote
Landon Arcie…, Agent, Scottsdale, AZ
Wed Jul 6, 2011
It depends on what loan program you are planning on doing. Some programs will let you us the rent as income. There are also many facts such as debt to income ratios, credit score, etc that come into play... Your best bet is to get in touch with a lender and discuss the different options they can provide. If you need a great lender in Arizona please let me know.
0 votes
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