Getting to Property #2

[Patrick Frueh]

I bought my first property almost a year ago using an FHA loan, a 4 bed/2 Bath in Columbus, OH. I've been house-hacking it and have saved up for a down payment on a new property. My mortgage broker told me that to get pre-approved for a new loan, I'll have to make significantly more from my w-2 work, have my current property under a traditional lease, or plan to sell it.

Having the current tenants sign a traditional lease together while I'll still living at the property sounds tricky. My question is, could I declare the intention to sell my house during pre-approval, but have the current by-the-room tenants sign a lease together when I find a new property and get it under contract? 

It seems like a good work-around, but also have no interest in entering any kind of fraud territory.  Anybody have guidance on this issue, or any other advice on getting to/financing property #2? 

[Marc Rice]

@Patrick Frueh

Have your tenants sign a month to month lease on your house and explain them the situation and how you need the leases to verify your income and that you’re not going to enforce it (could even sign a 12 month lease with them, with the tenants have an option to give 30 days notice to terminate at any time essentially making it a month to month lease. Doing this would allow the bank to use this income towards your overall income total.

In regards to the next house, if you buy a 2-4 unit that has rental income on the other units, the bank will be able to use 75% of that income to increase your total income they’re giving you a loan based on.

Happy to help answer any questions if needed on local lenders or strategies.