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Does your current home count against your income to debt ratio if you already have a purchase agreement?

My wife and I have mortgages on 2 homes. I have a small condo from years ago that is underwater. 2 years ago I qualified for a 2nd mortgage for a home for my then girlfriend, now wife to live in. We would like to buy a bigger home, so our plan is to sell her house first, then quickly find a new home and eventually rent out my condo. We met with a realtor today who said we may not be able to qualify because we have 2 mortgages now, but if we put the current house on the market and wait until we have a purchase pending, I don't understand what the problem would be. I have good credit and the underwatercondo mortage is under $500/mth.Thanks. by bahbsk_759_160 from Troy, Michigan. Jan 21st 2013 Reply


Barb Lanis (BarbLanis)
#69 ranked lender in Illinois - 679 contributions

You really need to have a loan officer look at your financial numbers, not a real estate agent. If you can qualify using both homes and a new purchase, you are in no hurry to list one or both of the properties. I would be pleased to refer you to a great lender in Michigan. barb.lanis@1amllc.com

Jan 21st 2013
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Steven Ceceri (123LoanYes)
#12 ranked lender in Rhode Island - 723 contributions

I'd be happy to discuss your scenario and get your pre-approved if you'd like. I can originate loans in all 50 States and I'm working today. The best option is to go online ASAP to www.123LoanYes.com and apply on my secure site. This will allow me to review your file and we can then discuss any incomplete item before we pull credit. I can be reached through this site by phone, email, or through my website. I'd be happy to work with you on this! Good Luck!

Jan 21st 2013
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Jesse Olson (jesseolson)
#657 ranked lender in California - 37 contributions

Hello, If the property hasn't been sold, then you would have to have enough income to cover all liability payments that show up on a credit report. If you can't qualify to cover all of the liabilities including the 3rd mortgage, then yes you would have to sell your other house first. I would get pre-approved by a lender who is licensed in Michigan.

Jan 21st 2013
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Joe Shamie (Joe Shamie)
#4 ranked lender in New Jersey - 1,412 contributions

Your realtor should not be telling you what you can or cant qualify for. The bottom line is you can have up to 4 financed properties and still qualify. However, if you want to buy your new home before you sell the old one, you will need to be able to qualify by including ALL the mortgages in your debt ratio calculation. In order for this calculation to be made, one would need a copy of your credit report. It is irresponsible for your reltor to make that type of suggestion without having all the information. As long as you have enough income to qualify, you wont need to sell the condo first. Joe Shamie 866-970-3400 x-274

Jan 21st 2013
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Jack Cyrul (Jack Cyrul)
#5 ranked lender in Michigan - 94 contributions

I'm located in Brighton Michigan and would be happy to give you a free pre-qualification. Call Jack at 734-395-9027

Jan 21st 2013
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Michelle Curtis Loan Originator NMLS 401173 (MichelleCurtisLO)
#77 ranked lender in Florida - 2,245 contributions

All current and proposed debt counts towards your debt to income including Home Owners association fees and home owners insurance

Jan 21st 2013
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Manuel Gonzalez (mmortgage1)
#91 ranked lender in New Jersey - 90 contributions

Hi, typically when your buying a home and have 2 others, the biggest hurdle is qualification for all 3 homes.There are a few guildelines for your particular scenario.I would check with a local licensed mortgage company and discuss your particulars with them. Many times, the Realtor will be surprised at the possibilities.Good LuckMG

Jan 21st 2013
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Steve Azarch (sazarch)
#18 ranked lender in Tennessee - 93 contributions

Like Barb said, you should be talking to a loan officer not a realtor about mortgage advice.It depends on what type loan you get but you should be ok with 2 mortgages as long as your debt ratio is in line with both payments.

Jan 21st 2013
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Linda Wintersteen (Linda123)
#62 ranked lender in Arizona - 1,256 contributions

YOU still have to count the debt on the house that you are selling, or purchase pending .. The what ifs, come into play.. What if the buyer doesnt close? What if the buyer is declined? What if the buyer changes their mind? What if the appriasal doesnt come in at the right value and the buyer walks? THis is why... IFyou have enough income to cover your existing mortgages, and debts, and the future rent on your condo doesnt not count ..THE only way is to show on your tax returns a rental for the last 2 y .. linda yourloanpartnerforlife@live.com a quick way is to take your income, For example , if your net income is $6000 and all of your debts and mortgages equals, $2500 and you can use your wifes income, , including in the debt the new home, you would be more than qualified.. yourloanpartnerforlife@live.com linda

Jan 21st 2013
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Mike Silkworth (msilkw_195_870)
#31 ranked lender in Michigan - 531 contributions

Hi bahbsk,Sounds like you have thought this through and sought out advice before moving forward - The next step is to consult with an experienced Loan Officer to review your scenario. There are additional items that come into play besides the ones mentioned here and you will want to make sure you are working with someone that has experience with multiple properties. Based on what you said, it sounds like there is a reasonable way to get a new home financed from you and your wife. If I can be of any assistance, please don't hesitate to call me at 517 489 2328. I'm located in East Lansing. = Mike Silkworth

Jan 21st 2013
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