Do any lenders count rental income in qualifying for a second loan?
My husband and I would like to buy a house and rent out our townhome. We can put down 5% and both have over 750 credit scores. Our income is pretty high but we're worried we won't qualify because of our first loan. I understand some lenders used to count 75% rental income towards your income but not anymore. Do any lenders allow a flexible debt/income ratio? by olivia1975 from New York, New York. Nov 18th 2009
Philip Baldessarre (Phillip Baldessarre)
#4 ranked lender in New York - 4 contributions
You are correct. We can use 75% of the gross rent on the property as long as we can show that the property you will be renting out has 25% equity left. We do allow a flexible debt to income ratio. Please give me a call or send me an email to discuss further, I would be happy to answer any other questions you may have.Philip BaldessarrePresidentPutnam Capital Services800-711-1071Phil@PutCap.com
Brian Esquivel (NewAZMortgage)
#23 ranked lender in Arizona - 67 contributions
You actually still can use your rental income to qualify for your other purchase. As an example, if your mortgage payment is $1000, you are able to utilize 75% of that payment or $750 to offset your debt to income ratio. You do want to make sure though that you have a valid rental agreement in place and that your property has at least 25% equity in it. (ie. a home worth 100k can only have a balance of 75K on it)
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