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Old 06-16-2010, 06:45 AM
8 posts, read 21,407 times
Reputation: 13


What are the requirements for FHA when you own rental property?

I was reading that Fannie Mae requires equity of 30% to qualify for a loan, does FHA also have the same guidelines? We can document our rental income - it's included in our tax return and have a signed lease through a property management company, but the property has less then 20-30% - it might only have 5% with the declining market. It was our primary residence, but we are renting it out because my husband's company relocated us to another state. We also have a short sale from a previous property on our credit and realize we will need to wait a few more years for that to be seasoned. We're just trying to plan for the future - not in a hurry to buy, just want to make better plans for my family's future.


(I posted this yesterday, but I realize it might have been confusing in the way I posted the question - too much background info)
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Old 06-16-2010, 01:15 PM
Location: Plano, Texas
1,676 posts, read 6,334,862 times
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Not having the equity in the investment property doesnt prevent you from qualifying. It only prevents you from using the rental income as income.
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Old 06-16-2010, 01:38 PM
Location: Laguna Niguel, CA
768 posts, read 3,959,121 times
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The equity requirement doesn't pertain to existing rentals, only applies to a primary residence that is being vacated... such as if you are living in a home that will be rented out after you move out, then in order to use that income to offset it's mortgage payment, you need to have the required equity (or for FHA they will also accept if you are being transferred due to employment). These days in order to use the rental income from an existing rental underwriters are looking to see the income has been reported for the last 2 years on the tax returns.
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