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Old 10-26-2013, 10:00 AM
 
Location: Pittsburgh
951 posts, read 823,433 times
Reputation: 648

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I currently own a 4 unit building where I currently reside. My next door neighbor may be interested in selling his single family home and since we share a driveway and our properties adjoin, it would be nice to buy it and move to that one so im super close to my current property.

question is, can I get a loan for the 2nd place with a 5-10% down payment if its going to be my primary residence? and will I need to show that my work income can cover both even though I can show rental history on the current building and current leases?

My current building generates considerably more income than my mortgage payment and that is with me occupying one of the apartments. By moving next door, the positive cash flow would be enough to pay for both mortgages and still be positive.

Next question would be, If I can do this, is it legal for me to move in and fix the place up then move right back over to my apartment building and rent the single family home?
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Old 10-26-2013, 10:39 AM
 
4,787 posts, read 8,754,839 times
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The answer to your first question- yes.

The answer to your second- NO ! - that's what's known as mortgage fraud Seriously- did you have to ask that ? You want to buy it as your primary just for the low down payment, but actually use it as an rental investment. Then it's not your primary residence, is it? It's not your residence at all.
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Old 10-26-2013, 10:42 AM
 
3,317 posts, read 7,253,255 times
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Guidelines and rates are very similar for 2nd homes - however, the proximity requires that it either be deemed your new Primary Residence, which I heartily suggest, or an Investment property.

You don't need to tell them your long-term plans. You need to assert that you will occupy the home, within a reasonable time from the closing (I'm implying "immediately" here).

Regarding income, two years' tax returns will be used and you will not be able to use the gross rents, but income as determined across the tax returns. Use this: Self Employed Cash Flow Analysis Calculator
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Old 10-26-2013, 11:50 AM
 
Location: Pittsburgh
951 posts, read 823,433 times
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Quote:
Originally Posted by willow wind View Post
The answer to your first question- yes.

The answer to your second- NO ! - that's what's known as mortgage fraud Seriously- did you have to ask that ? You want to buy it as your primary just for the low down payment, but actually use it as an rental investment. Then it's not your primary residence, is it? It's not your residence at all.
I bought my first building as a primary residence and the terms stated I must occupy it within 90 days of closing and for a minimum 1 year time frame (fha loan). I didnt mean move in and back out in a month, I meant is there a general time frame required on conventional mortgages? 6 months? 1 year? that you must occupy it.

and yes, I plan to use it as in investment property at SOME point in the future. be it 6 months or 6 years from when I buy it. But for some legal period of time, I will use it as my primary residence. again, whatever period of time that may be.
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Old 10-26-2013, 12:05 PM
 
3,317 posts, read 7,253,255 times
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Quote:
Originally Posted by jea6321 View Post
I bought my first building as a primary residence and the terms stated I must occupy it within 90 days of closing and for a minimum 1 year time frame (fha loan). I didnt mean move in and back out in a month, I meant is there a general time frame required on conventional mortgages? 6 months? 1 year? that you must occupy it.

and yes, I plan to use it as in investment property at SOME point in the future. be it 6 months or 6 years from when I buy it. But for some legal period of time, I will use it as my primary residence. again, whatever period of time that may be.
Nobody is going to check up on you. Typically, when buying a home within proximity to the existing one, the Subject Property needs to be substantially "better" - - larger, more amenities, etc., such as an SFR is likely to be more desirable than a unit in a multi-plex.

You will likely have to write and sign a note pledging that you are vacating your present residence in order to rent it out, and will move into the SFR shortly after closing. And leave it at that.
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Old 10-26-2013, 12:07 PM
 
14,364 posts, read 16,282,448 times
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I think 1 year is the rule for many mortgages, possibly 2 years., where the owner needs to reside in the home. Check with a mortgage broker to see how long you need to live in the home in order to meet all the rules. Also when you move out of the home and back to the apartment, you would need to modify HO insurance to a policy that is for renters residing there instead of owner.

Back when I had a rental and primary home and loans on both, the lender allowed 50%of the irental income from the leased home to apply as income for qualifying purposes. Guidelines might have changed since then and rules might vary by lender.
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Old 10-26-2013, 12:53 PM
 
Location: Pittsburgh
951 posts, read 823,433 times
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thanks for the help. sware, I think things have changed a bit. I was able to use 75% of leases under fha, but 0 if I went conventional. since I can not have 2 fha loans, I think conventional will just look at my tax returns for 2 years and use those numbers to qualify me. Ill contact my broker and if I get any more details figured out I will update this thread at that time.
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Old 10-26-2013, 01:29 PM
 
Location: Southern California
4,350 posts, read 4,931,746 times
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2 FHA is possible but not sure why you'd need to.

Last edited by thelopez2; 10-26-2013 at 02:23 PM..
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Old 10-26-2013, 02:04 PM
 
3,317 posts, read 7,253,255 times
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Quote:
Originally Posted by thelopez2 View Post
2 FHA is possible
This is true. Or you could go with a Flex-97 with lesser PMI, or do 5% down and have the seller pay cccs.
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Old 10-26-2013, 02:37 PM
 
Location: Southern California
4,350 posts, read 4,931,746 times
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Why haven't you refied the existing FHA to conventional? Non owner occ rates are low too.
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