Mortgage Advice for Vacation Home that will also be Rental.

[Drue Pennella]

Hello everyone. My wife and I are interested in purchasing a vacation home in Martha's Vineyard that we would rent out and have managed. We currently live in NJ and are renters. We do not own a home. We love Martha's Vineyard and would like to purchase a small house there in the $500,000 range. We have one in our sites that is about as turn key as you could get. Newly renovated, small and managable. Our intention is to use it perhaps 4 weeks out of the year. Perhaps one week before the main season. One week in peak season and then over the holidays. We would then rent it out during the main season as a weekly rental which is a very popular thing to do in Martha's Vineyard.

My parents recently passed away and I have been left an inheritance of roughly the purchase price of the house. This is what has made this consideration possible. It means it is possible to purchase something for cash but we do not want to do that of course. We would like to do the 20-25% down senecio with a mortgage. Everything looks good for us to get a mortgage except for the fact that because we rent our apartment in NJ this pushes our debt to income ratio above the acceptable percentage. If we were purchasing it as a primary residence then there would be no problem as our current rent would pretty much become the mortgage payment. This will be an investment property with some personal use. The local island bank we went to doesn't seem to want to include the potential income from the property as part of the equation. We are confident we could rent it out and pretty much cover the mortgage and expenses. We are not looking to have an initial ROI.

We are just starting this process of looking for a mortgage. I also looked into Quicken Loans more to get a prospective from a larger lender.

My question is, is there anywhere/anything else we should be looking/doing/considering when it comes to purchasing this property with a mortgage given our situation?