Owner-Occupied To Investment Home Mortgage Guidelines

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this blog, we will cover and discuss turning an owner-occupied to investment home. The exiting home will turn into a rental investment home. By doing so, buying a new primary residence home will not be stressful due to rental income coming in from the exiting home. There are cases where a homeowner with an owner-occupied home wants to purchase another owner-occupied home. Then wants to sell their current owner-occupied home after they move in to their new owner-occupied home. This can get done under certain circumstances. Homeowner needs to qualify for both mortgages.

Expenses on the Exiting Home Needs to Be Calculated on Debt to Income Ratio on New Home Purchase

Expenses on the Exiting Home Needs to Be Calculated on Debt to Income Ratio on New Home Purchase

Borrowers needs to meet minimum debt to income ratio requirements. Cannot qualify for both mortgages if they exceed the maximum debt to income ratios. However, there are potential solutions. A homeowner with an owner-occupied home can convert the owner-occupied to investment home without refinancing. Homeowners can use 75% of the potential market gross rental income as borrowers income. There are rules and regulations concerning this. It depends on whether the new owner-occupied home purchase is a FHA or conventional loan. In this article, we will discuss and cover exiting an primary home and making it a rental & Buying New Home.

FHA Owner-Occupied To Investment Property Guidelines

If a homeowner currently lives in a home and needs to convert their owner-occupied to investment home to use potential income, the following applies. If the borrower of the new home needs to use the potential rental income on exiting property in order to qualify, then the homeowner needs to have at least 25% equity in exiting property. The homeowner does not need to refinance their home.

How Can Exiting Home Debts Be Exempted on Debt to Income Ratio Calculations

How Can Exiting Home Debts Be Exempted on Debt to Income Ratio Calculations

If the loan to value is higher than the 75% LTV required, homeowner can pay down their mortgage so it meets the 75% LTV. Needs to get an investment home appraisal with potential rental income. Whatever the appraiser comes up with as potential rental income, then 75% of the potential rental can be used as qualified income. This rental income is necessary for many folks in order to qualify for both mortgages. HUD, the parent of FHA,  does not require that the homeowner have a tenant with a signed lease. HUD only requires that the homeowner has 25% equity on the owner-occupied home that will be converted to an investment home.

Fannie Mae Owner-Occupied To Investment Property Guidelines

If a homeowner currently lives in a home and needs to convert owner-occupied to investment property they can use potential rental income as qualified income. If homeowner needs to use potential rental income in order to meet the debt to income ratios under certain circumstances. Homeowner needs to have at least 25% equity in exiting the owner-occupied home. Under Fannie Mae Guidelines, a one year lease agreement is required on Conventional loans. In order to use 75% of the potential rental income on conversion of the owner-occupied to investment home. The homeowner also needs two months reserves on both converted exiting owner-occupied to investment homes. Also needed are two months reserves on a new owner-occupied home purchase. The new conventional mortgage loan program is much stricter than the FHA loans.

Qualifying For a New Home Without Selling the Existing Home

Qualifying For a New Home Without Selling the Existing Home

Homebuyers who need to qualify for mortgage with a mortgage company licensed in 48 states with no mortgage overlays can contact us at GCA Mortgage Group at 262-716-8151 or text us for a faster response. Or email us at [email protected] Gustan Cho Associates Mortgage Group has no lender overlays on FHA, VA, USDA, and Conventional loans. Gustan Cho Associates is licensed in 48 states are are expert on non-QM loans and bank statement loans for self-employed borrowers. We are available 7 days a week, evenings, weekends, and holidays.