All Forum Posts by: Carlo Con

I would like to qualify for a new home loan.  I spoke to 3 different home loan officers and they have given me different information each time.  Here's my scenario.

I bought my house in 2016 and started renting it out in 2018.  My mortgage is $1400 and I am now receiving $1700 from renters.  I am trying to remove my mortgage liability when I apply for a new loan.  My tax return is not filed yet, but it looks like this:

Rental income: $20,400

expenses: $11,857 (mortgage insurance, property taxes, PMI, and home insurance)

depreciation: $4,809

Schedule E profit: $3,734

I have an additional $2,500 worth of home expenses which I did not include because I want to reduce mortgage liability but at the same time get the biggest tax return possible.

Question 1:  Should I include additional expenses in tax return?  Will the underwriter reduce the amount of what I can be approved for because of additional expenses?  

Question 2:  Will my $1700 wash out mortgage liability.  One loan officer said told me that they would only take 25% of $1700, which is 1,275.  Another loan officer told me that 25% rule only applies to "departing resident" and that I would not only wash out loan, but have an additional income of $300 a month.  

@Donald S.undefined

My house is worth about $250k. That should cover the equity. However, the PMI can't be removed since it is for the life of the FHA loan. Only way to remove is by going conventional. Right?

Thank you so much for the advice.  Going conventional!

I currently have a FHA $200,000 loan with an interest rate of 3.375% with a pmi flat fee of .85% ($141) of original loan amount. I want get a conventional loan to drop my PMI payment of $141 per month. However, the conventional loan rate is currently about 4.25%.

Should I stay with my current FHA loan or switch to conventional loan?