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Is this considered a second mortgage? What should I do with my first home?

So the market in our area has been doing quite poorly. In order to maintain my mortgage I had to begin renting out my home, I have been doing this for two years. I figured this was smarter than selling it and losing money. I am already to purchase a new home with my boyfriend, can I get another loan even though the first home is not my primary residence any longer? by shanna209 from Calabasas, California. Jun 28th 2010 Reply


Nic Netherton (ColoradoLender)
#15 ranked lender in Colorado - 57 contributions

Yes you can get another loan for a purchase of a new primary residence as long as you qualify. If you can show a history of reporting the rental income on your tax returns you will be able to use 75% of that rental income to qualify for the new home purchase.

Jun 28th 2010
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Matt Davis (Matt Davis)
#151 ranked lender in California - 52 contributions

Hi Shanna,Lenders will look at the other property as an investment property and then consider this new purchase to be your primary residence. You will need to qualify for the new home using any postive or negative cash flow. We can go over the whole process with you and get you pre-qualified to see how much home you both can afford. Please call or email us at 888-PierWest(743-7937) X 701 - matt@pierwestcapital.comBest,Matt

Jun 28th 2010
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Peter Kelsey (pkelsey)
#12 ranked lender in South Carolina - 8 contributions

It is not a second mortgage. It would just be considered an investment property and the cash flow from it would be considered when calculating your income ratios. As long as you have sufficient income to support repaying the new loan and some sort of assets in reserve in case the investment home sits empty... you should be just fine.

Jun 28th 2010
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Rudi Hofmann (CaPortfolioLoans)
#281 ranked lender in California - 380 contributions

The way I understood your question, is you are renting out rooms. This is not investment property at the moment.When you are seeking financing for your new primary residence, your current property will become investment property. You'll need to have a debt-to-income ratio within 50%.Most lenders today require two years of documented property management experience, or you may hire a firm for that purpose. Then, if you have 30% equity in your current home, you'll be able to count 75% of your rental income in your debt to income ration to help with qualification. .... Happy funding, Rudi.

Jun 30th 2010
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