Posted on: 25th Feb, 2011 05:31 pm
I currently own a townhouse, I've had it for about 6 years now and had refinanced a about a year ago. I recently got a new job within D.C. making about 90K a yr. My plan is to keep this existing house and rent it out roughly at my monthly mortgage payment. The principle balance on the morgage right now is roughly 149K My budget for my new house is around 300K with 30K down. I called a couple of lenders and I'm getting the following.
1. Credit union I've delt with can't do it because my debt to income ratio is about 54% and I would need 2 taxable years of rental exp. He said I would have to pay off 50K of debt. I only have 15K left on my student loan and 10K left on a vehicle.
2. Called another credit union and they said they can't do it. They would only include 75% of the montly rent as income and need 1 yr rental property experience.
So my question is it possible, is what I"m asking unreasonable from banks. I don't want to sell because in this economy I won't make much (possibly nothing).
1. Credit union I've delt with can't do it because my debt to income ratio is about 54% and I would need 2 taxable years of rental exp. He said I would have to pay off 50K of debt. I only have 15K left on my student loan and 10K left on a vehicle.
2. Called another credit union and they said they can't do it. They would only include 75% of the montly rent as income and need 1 yr rental property experience.
So my question is it possible, is what I"m asking unreasonable from banks. I don't want to sell because in this economy I won't make much (possibly nothing).
it is the standard now - the risk of you walking away is too high (on the old home)
1. The requirement to have two years rental management experience on two years tax returns is a Freddie Mac requirement and the requirement of any lender who wants to make it their requirement.
It is not a requirement for Fannie Mae loans nor FHA loans
2. What is the value of the townhouse?
The mortgage balance is $149,000. To do an FHA mortgage on the new purchase, the value of the townhouse must be at least $198,700 in order to use rental income to qualify and FHA allows 85% of the rental income.
To do a Fannie mortgage on the new purchase and use the rental income on the townhouse to qualify, the value of the townhouse needs to be at least $212,900.
3. We can not compute your debt ratio because we do not know:
Monthly payments on existing debts on the credit report
The monthly rent you will receive
The monthly mortgage payments on the townhouse
The monthly maintenance fee on the townhouse
The value of the townhouse, so we know if we can use rent or not
It is not a requirement for Fannie Mae loans nor FHA loans
2. What is the value of the townhouse?
The mortgage balance is $149,000. To do an FHA mortgage on the new purchase, the value of the townhouse must be at least $198,700 in order to use rental income to qualify and FHA allows 85% of the rental income.
To do a Fannie mortgage on the new purchase and use the rental income on the townhouse to qualify, the value of the townhouse needs to be at least $212,900.
3. We can not compute your debt ratio because we do not know:
Monthly payments on existing debts on the credit report
The monthly rent you will receive
The monthly mortgage payments on the townhouse
The monthly maintenance fee on the townhouse
The value of the townhouse, so we know if we can use rent or not
