Primary Home Mortgage

[Alexandre Medeiros]

Hi, I have good credit ratings but do not currently own a primary home (currently renting). If I buy one or more properties for investment, will that affect my mortgage rate if/when I decide to buy a primary home in the future? Should I assume the answer is yes given that I will have more debt under my name?

[Andrew Postell]

@Alexandre Medeiros knowing a good bank is really important.  Not every bank will qualify you on rental income but some will.  What I mean is that every rental property you have should be a "net zero" against your "debt to income" ratio.  Since you have rental properties that cash flow, this will counter balance the mortgage debt.  In theory at least.  So as long as the bank is counting your rental income for you then it shouldn't hinder you when buying a property as your primary home  FOR "DEBT TO INCOME" purposes.  However, for every rental property you own, the more "reserve" money you will need.  Reserve money is the money left over AFTER the loan closes.  Reserves are calculated based on the mortgage, taxes, and insurance on a property.  So if you own 1 property with a payment of $1000 per month (mortgage, taxes, and insurance) and the bank requires 2 months of reserves, then you would need $2,000 left over after you buy your primary home.  I hope I am describing this clearly.  Essentially, owning a rental property won't hurt you debt wise but will force you to have more money in the bank.  Hope this helps but feel free to ask more questions if you need. Thanks!