Posted on: 29th Jan, 2010 07:03 am
I just purchased a home last year in a new area I moved to. I brought my parents to live with me and now wish to rent this property out to them. I would like to purchase a new primary residence; leaving my first purchase as a rental property. What do the qualifications consist of in getting this accomplished? Do the banks need to prove I can pay both properties or may I only provide proof of rental receipts? I cannot afford both which is why one must be a rental property. My father is a disabled veteran and recieves money from the government. He has a steady income and can afford the low monthly payment he will be renting from me. What loan may I be able to qualify for? I am not really sure where to start. I the money for the down payment and decent credit score. Please help.
It depends on the lender. If you have an executed lease and deposit. Most lenders should accept it.
guidelines regarding transactions such as you describe have changed in the last couple of years. one of the major considerations is location. how close is this property to the home that you plan to purchase? how much equity have you in this property? each of these items must be considered by a lender in determining your qualifications for the new loan to purchase.
generally, you need about 35% equity in a property to convert it to rental as you make a new primary residence purchase. that may well be quite difficult given your short duration in the home, unless you had a substantial down payment.
you'd have to have your parents sign a lease, of course, but the lender will also seek out an appraiser's analysis of the local rental market to ensure that whatever rent you charge is valid in that market.
generally, you need about 35% equity in a property to convert it to rental as you make a new primary residence purchase. that may well be quite difficult given your short duration in the home, unless you had a substantial down payment.
you'd have to have your parents sign a lease, of course, but the lender will also seek out an appraiser's analysis of the local rental market to ensure that whatever rent you charge is valid in that market.
If your parents are over 62, sell them the house via a reverse mortgage, they`ll only have to pay taxes and insurance. then go buy a home in your name it will probably work out well. sell to them for the existing mtg, however it does all depend on the appraisal
that's not a bad idea - the reverse mortgage thought.