Investment Property Mortgage (loan, credit score, requirements, rate)

[KarenL1958]

I live in the Tampa Bay area and am interested in buying an inexpensive home or townhouse for my son to rent from me. I currently have a small mortgage on the home I live in. How does a mortgage on an investment property work with regard to qualifying? Do they take into consideration income from renting it or just base it on income/debt ratio and credit score as in a conventional mortgage? Any other things different?

Thanks.

[EdCampbell]

The lenders will only allow you to use future income from an investment property if you can show a 2 years history of it on other properties.

Investment properties require a larger down payment, higher rate

[KarenL1958]

So first investment property would require me to qualify just on my income alone and not any future rent. Thanks.

[schoolofhardknocks]

Originally Posted by KarenL1958

So first investment property would require me to qualify just on my income alone and not any future rent. Thanks.

If you can show 2 years landlord experience, you can qualify with the future rents. It doesn't have to be recent experience.

If you're doing FHA, you can qualify with market rents.

[SmartMoney]

Originally Posted by KarenL1958

So first investment property would require me to qualify just on my income alone and not any future rent. Thanks.

Ask around where you are buying. There are Freddie Mac lenders out there that will let you use rent to offset PITI. That said, you are in an infamous sand state (sand states got hit HARD in the meltdown and have tougher requirements). It's definitely worth a day of dialing around and asking the direct question: "do you allow the use of rental income to offset PITI on a 1st time investment loan?"

[thelopez2]

Originally Posted by schoolofhardknocks

If you can show 2 years landlord experience, you can qualify with the future rents. It doesn't have to be recent experience.

If you're doing FHA, you can qualify with market rents.

FHA for a non owner occupied property to be rented to a family member? Are you saying FHA is a option?

[SmartMoney]

The only way (well....okay other than an reo) someone is getting a new FHA investment loan is on a 2-4 unit with the note-signer living in one of the units.

[berniekosar19]

Originally Posted by thelopez2

FHA for a non owner occupied property to be rented to a family member? Are you saying FHA is a option?

In that instance, no. You can't use FHA on a non-primary residence; it would only be possible if you were going to use it as your primary residence and your other home wasn't on an FHA loan.