One house hack to the next and how to fund

[Erwin Li]

Hello everyone,

It has been almost 1 year since purchasing my first deal and I'm planning on looking for the next one middle of 2023. 

I am curious on how the lending works if I have my townhouse fully rented, does my debt to income ratio go back to 0 if the rent covers all the running costs of the property? 

The property has ~30% equity in it and I plan on keeping the equity in the property. I will have ~$90k for a down payment on the next property if I buy by middle of 2023. 

Looking around I am hoping I can find a SFH around $500-550k. The question would be should I continue to save until I reach the 20% down payment and push my purchase out one year, put a 5% down payment for an owner occupied loan, or pull equity out of my townhouse to make up the missing down payment amount to get the 20%?

In the perfect world I would be able to qualify for a loan that is 4x my income ($460k) plus my $90k down payment allowing me to purchase a home around $550k price point.

I am looking for homes in central BC, not Vancouver BC.

[Chris Baxter]

@Erwin Li your best bet is to connect with a mortgage broker. Assuming your TH is on a residential mortgage, any future lending will likely only allow you to count 50% of the income on that property. Also, if the property has 30% equity, it likely has no equity from a lender's perspective as you can likely only refinance up to 75% LTV.