News and Tips

Convert an existing primary home to a rental property

31 Mar , 2011  

Did you find your dream house before selling your existing home? Are you hesitant to put your house on the market now because of reduced appraisal values? There are several ways to turn your current home into a rental property and qualify for another Conforming home mortgage ($417,000 or less).

1) If you have 30% equity (per recent appraisal) in the current home and want the rental income to help offset your debt, you need a 2 yr history (per tax returns) of managing rental property. Your lender will ask for a copy of the fully signed rental agreement, security deposit and deposit of security deposit to your account. You’ll need to have at least 2 months of the total payments (PITI) of both the rental and new home in reserves (in addition to what you will need to close on the new home).

2) if you have 30% equity (per recent appraisal) and do NOT have the current home rented yet, you will qualify with both rental and new property PITI payments and need to have at least 2 months’ PITI reserves.

3) if you do NOT have 30% equity in the current home, OR you do NOT have a minimum of 2 years (per tax return) managing rental property, you will not be able to use any of the rental income to qualify for the new loan. The lender will require 6 months PITI reserves from both properties.

Contact Ashleigh Clark at 704-307-9908 to learn if you CAN buy that new dream home without worrying about selling in a down market.

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