| Author |
Previous Topic | Next Topic |
|
JEMORTGAGE
338 Posts |
 Posted - 10/13/2008 : 07:34:55 AM
|
| My client currently owns a home that she rents out, she wants to buy a home for herself since she now lives with her parents...can she buy a home under her name with 3% down? how will home being rented out be calculated? thanx |
|
mganovsky
2049 Posts |
Posted - 10/13/2008 : 08:35:49 AM
|
| If you need to use the rental income to qualify then she must have atleast 30% equity in the home otherwise you will have to qualify her with both PITI's and will not be able to use the rental income to off set the mortgage on the rental property. |
|
|
JEMORTGAGE
338 Posts |
Posted - 10/13/2008 : 08:44:41 AM
|
| Shes actually even on property, so we wont be able to use rental? wow |
|
|
nowbroker
1362 Posts |
Posted - 10/13/2008 : 08:50:25 AM
|
FHA's rule is 25% equity, conventional is 30%.
How long has she rented the property out? That rule applies if the borrower is converting a primary residence to a rental property. It will not apply if the home has been rented for a time, and reported on tax returns.
At the end of mortgagee letter 2008-25 there is this statement:
The guidance in this Mortgagee Letter applies solely to a principal residence being vacated in favor of another principal residence. This Mortgagee Letter is not applicable to existing rental properties disclosed on the loan application and confirmed by tax returns (Schedule E of form IRS 1040). |
|
|
mganovsky
2049 Posts |
Posted - 10/13/2008 : 09:47:51 AM
|
| oops!!!!!!, I stand corrected |
|
|
JEMORTGAGE
338 Posts |
Posted - 10/13/2008 : 11:09:10 AM
|
| she currently lives with her father and wants to move out...she has never lived it property under her name |
|
|
nowbroker
1362 Posts |
Posted - 10/13/2008 : 12:12:20 PM
|
| Then you are fine, FHA will go off the income/expenses off the tax returns (net income plus depreciation). The equity rule does not apply. |
|
|
| |
Previous Topic | Next Topic |
|
Search for: 
