Forgotten Your Password?

Need to Register?

Question Icon

If i am buying a second home and renting out the initial property, can I use the "anticipated" rental income to qualify for the new loan?

by anastasia_duran239 from Marina Del Rey, California. Jan 12th 2016 Reply


William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,722 contributions

Ok.. There needs to be some clarification.. if your purchasing a 2nd home (Vacation home) and you rent it out, then it's not a 2nd home, it's an investment property.. guidelines are different. Even if your intent is to rent it out one day a year, then it's considered an investment property.. and as such, it's up to the underwriter to determine whether or not they will allow anticipated income.. Typically, if you have schedule E income (other rental properties) then the lender will typically allow for anticipated income... if you have no rental experience, then it's up to the underwriter to determine if they will or will not allow it.. If the borrowers Debt to income ratios are so tight that they need every cent of anticipated income to qualify, then it's unlikely you will get approved.. the underwriter is going to look at other strong compensating factors to allow it.. If the underwriter does allow anticipated income, then more than likely they will need a supplemental rental comparable addendum to the appraisal to determine what the projected rent will be.. and then the underwriter will only allow 75% of that number.. they might also require a rental agreement and might require you to show the first months rent and security deposit being received.. again, the rules for anticipated income are vague, so its' up to the underwriters discretion to interpret them per their companies objective. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

Jan 12th 2016
1
0
Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,240 contributions

Good question to find out in advance! I'm assuming when you stated a "second" home, you mean a new home you will live in full time. It depends partly on the type of mortgage you are applying for to purchase the new home. For a conventional/conforming loan it is possible but depending on any lender overlays (additional requirements) you would have to provide a signed lease on the home you are renting, possibly copy of a check for first month rent, and definitely could only could count 75% of the documented rental income until you can provide a federal tax return showing more than that in net rental income. For a jumbo loan, it will vary depending on the specific mortgage. Good luck!

Jan 12th 2016
0
0
Linda Thompson (LoansbyLinda)
#857 ranked lender in California - 32 contributions

Hi Anastasia,I do have lenders that will allow anticipated rental income as long as a "rent survey" is done with the appraisal. I am assuming you mean your current primary residendence.I am in California, give me a call 510 332 3282

Jan 13th 2016
0
0
Larry Gray (lgray_312_247)
#594 ranked lender in California - 1,139 contributions

We do have loans that allow for including rental of the current primary property while purchasing a new primary property. We are primarily known as a prime purchase loan mortgage bank. You can contact me- lgray@mmcdcorp.com formore information.

Jan 13th 2016
0
0
Subscribe to our news feed.