Can I qualify for a new mortgage using prospective rental income?

General Landlording & Rental Properties
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Can I qualify for a new mortgage using prospective rental income?

PJ Collazo
Member since 2023 · 2 posts · 1 vote

How lenient are lenders in the current economy with deducting prospective rent when seeking a mortgage on an investment property?

I'm wanting to downsize, rent out my current home (45% equity atm), and purchase a new primary residence.

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Eliott Elias
Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
2y

Lenders should be taking the mortgage off your DTI if you are collecting rental income. I believe it is 75% year one and 100% after that.

 

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  • Doug Smith
    Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
    2y

    Doing it with a rental is easy...and it's actually the norm...but doing it for a primary residence is not usually done. It actually might be possible to do a 2nd mortgage or DSCR loan on the current home to bleed equity out for another purchase. If you decide to sell that original house, we actually have a bridge loan product that will remove that debt from your debt to income ratio for the new property. For that program, the new property does have to be in FL for us to do it, but I can likely hook you up with another lender in another state if that is something you want to do. We can do investor loans across the US, so we can likely help bleed equity out of the current home as a rental. I would be happy to chat.

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  • Devin PetersonBusiness Member
    Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 664 votes
    2y

    If you are looking to purchase an investment I would try to get a cashout refi, heloc, or bridge on the current home if that's a primary. Given where your current rate is and when you bought the home means a great deal here. There are a few unanswered questions here first. Where is the home located? What is the current rate you have? About how much equity do you have in the property? 

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  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    2y

    Lenders should be taking the mortgage off your DTI if you are collecting rental income. I believe it is 75% year one and 100% after that.

     

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  • PJ Collazo
    OP
    Member since 2023 · 2 posts · 1 vote
    2y
    Quote from @Devin Peterson:

    If you are looking to purchase an investment I would try to get a cashout refi, heloc, or bridge on the current home if that's a primary. Given where your current rate is and when you bought the home means a great deal here. There are a few unanswered questions here first. Where is the home located? What is the current rate you have? About how much equity do you have in the property? 


    The home is located in Las Vegas and the current rate is 2.75%. 15% equity on original loan. I expect an appraisal to be around 45% equity based on comps

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  • Kristen L GarnerBusiness Member
    Lender · Phoenix, AZ · Member since 2021 · 451 posts · 287 votes
    2y

    Hi! Your mortgage from your departing primary would still count towards your DTI however 75% of either a lease agreement or a 1007 page on an appraisal can be used towards your income. In the future, after that house has been rented long enough to be on taxes, lenders will use what is reported in your taxes. Feel free to DM me if you want to bounce some numbers around.

    [email protected]213-880-0434
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