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Message
Buying a new house while renting your previous one
Posted on 9/2/14 at 8:15 pm
Posted on 9/2/14 at 8:15 pm
If I'm currently paying a mortgage on my house but wanted to move out and rent my current home, how would I go about getting approved for the loan for a new home?
I've never done this or have any idea how this works. Is it even possible?
Not making any move in the near future. Just wondering how it all works.
I've never done this or have any idea how this works. Is it even possible?
Not making any move in the near future. Just wondering how it all works.
3
Posted on 9/2/14 at 8:54 pm to King of New Orleans
Depending on the lender, they'll ask you to prove certain things and meet certain requirements. It's definitely harder to get than it was 10 years ago.
Posted on 9/2/14 at 9:56 pm to Big Scrub TX
quote:
they'll ask you to prove certain things and meet certain requirements.
Such as?
Posted on 9/2/14 at 10:35 pm to King of New Orleans
You'll need a higher credit rating and/or higher down payment and/or pay higher interest.
If you keep the old home to rent don't forget to start depreciating it. The IRS will assume you have when you sell it even if you don't.
If you keep the old home to rent don't forget to start depreciating it. The IRS will assume you have when you sell it even if you don't.
This post was edited on 9/2/14 at 10:36 pm
Posted on 9/3/14 at 12:06 am to King of New Orleans
quote:
Such as?
They'll check your level of rental income vs your other mortgage payment. They'll have to confirm what kind of down payment you can afford on the new place and might actually require a lower LTV. etc. etc.
Posted on 9/3/14 at 8:36 am to Big Scrub TX
It all depends on your DTI ratio or at least that is what my lender has told me when I did the last one. As long as you are under the ratio they don't care what the debt is. To get it where the rental didn't count against my DTI they wanted to do an appraisal on the rental house and I had to have at least 80% equity in the house and have a lease signed with a deposit.
Posted on 9/3/14 at 8:42 am to King of New Orleans
you cant claim rental income until it is filed on your income tax. so your going to have to qualify for the new house with the old house note counting against you.
Posted on 9/3/14 at 9:12 am to hawkeye007
I guess it all depends on the lender, but from my experience you can't count the rental income until it is on your tax return like poster above me said. So you may have to qualify for both. I think it makes sense from the lenders perspective bc if you can't afford both and get a crappy tenant then the bank has a higher probability of having to foreclose on one of the properties which isn't good for anyone.
Posted on 9/3/14 at 9:25 am to BullredsRus
It was a couple of years ago the last time I did it. It does seem to continue to be more difficult to do so it wouldn't surprise me if they added these requirements.
Posted on 9/4/14 at 4:28 pm to King of New Orleans
Did you not purchase a home recently?
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