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We are looking into moving into a larger home. Currently, we own two rental properties and would be looking to rent our current residence out. Will we be able to qualify for a new home loan in this circumstance? What are some things we should do to position ourselves to qualify? Our credit scores are both over 775. The houses would all take a 20k+ losses each trying to sell them in thise short sale/foreclosure saturated market. Any suggestions or advise is appreciated.

2 Thoughts on Can we get a new home loan while owning 3 rental properties?
  1. Reply
    February 6, 2013 at 9:28 pm

    If the houses are rented, with leases, most lenders will figure in 65% of rental income for your income. The question is, since there’s no equity in these houses, in fact negative equity if you’re right(don’t tell banks), can you get a mortgage for an owner-occupied house. My guess is NO. You’d have to be renting these houses for good sums and have really top income, plus at least 10% down payment.

  2. Reply
    February 6, 2013 at 9:48 pm

    It’s really difficult to say without knowing all of the right information but I can tell you this much.
    Under buy and bail guide lines here is a list of things you’ll need to consider.
    1) Lenders will use 75% (not 65%) of the gross rental only if you can show that income on tax returns or if you have 20-25% equity in the home. In order to prove the equity, you will have to provide an appraisal.
    2) You will need up to 6 months reserves for each mortgage payment so if you have 3 mortgages at $ 2,000 each you will need to show up to $ 36,000 in liquid assets.

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