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Renting out 1st home question

legearlegear Member Posts: 6,716
edited December 2011 in General Discussion
Im looking to buy a new home soon. I think I can rent out my home quicker than selling it.

How will this go over as getting a loan for a new home? If rented out, will the income cover the debt ratio from keeping the 1st house.

I can get the new home no problem, but I worry about the debt/income ratio if I keep the first home also.

Comments

  • Mr. PerfectMr. Perfect Member Posts: 59,460 ✭✭✭✭
    edited November -1
    It's generally only viewed as stable income if you can show a rental contract when you apply for the loan. If you show rental income that is enough to cover your mortgage and upkeep, likely you'll be able to show it as offsetting your home mortgage payment.

    Likely any lender is going to want you to show that the rent has been coming in for some minimum period of months/years.
    Some will die in hot pursuit
    And fiery auto crashes
    Some will die in hot pursuit
    While sifting through my ashes
    Some will fall in love with life
    And drink it from a fountain
    That is pouring like an avalanche
    Coming down the mountain
  • MaxOHMSMaxOHMS Member Posts: 14,715
    edited November -1
    quote:Originally posted by dennisnielsen
    Way too much left unsaid


    Right.

    What color is the house?
    [:D]



    .......Ask your banker.
  • LaegerLaeger Member Posts: 675 ✭✭✭✭
    edited November -1
    I have rental properties and most of the time a bank will want to see 12 months of stable income from that property or your prior years tax return. I have found it's better to use a local bank, they seem to work with you better if they know you.
  • bpostbpost Member Posts: 30,977 ✭✭✭✭
    edited November -1
    They factor in a lot of expenses for a rental and if your rent does not exceed PITI by 30-50% they consider it a LOSS. Insurance will go up if the dwelling is not owner occupied.
  • SawzSawz Member Posts: 6,049
    edited November -1
    I think they count your new home as investment property and your interest rate will be higher? maybe not or the down payment higher
  • chollagardenschollagardens Member Posts: 4,413 ✭✭✭
    edited November -1
    Renting out a property can be a very good thing for you if you do your homework and everything correctly. If not then it can be a nightmare. You need to talk with people in YOUR area that have experience and no motive to make money off you to get you up to speed on contracts, Federal law, and tenant screening etal.
  • select-fireselect-fire Member Posts: 62,759 ✭✭✭✭
    edited November -1
    Starting investment property is wise if you are cut out to be a landlord. The banks aren't going to look real difficult in that direction because they are looking at your net worth and equity in the old home. Explain the tax benefits to the banker of mortgage interest, taxes, depreciation, repairs, on the rental you will obtain. Good luck and go for it.
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