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We are working on preapproval and just discovered that we may not be able to do an FHA loan because our rental house is on a 6 month lease rather than a 12 month lease. We have no other debts but the mortgage is sizeable enough to mess with our debt to ratio given the price of the house we want to buy. Is there no hope for us while we have the current tenants? I will be so depressed if we have to rent for a year until we look more attractive to an FHA (or come up with 5% we don't currently have). Time urgent question so would appreciate any thoughts at all. Thank you
Location: central, between Pepe's Tacos and Roberto's
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Although FHA does not necessarily stipulate how long a lease must be viable for, they do stipulate that you must be able to prove the stability of the income. If the lease agreement is for 6 months, but the renters have been in said property for 2 years than that may be acceptable. That being said, it may be a lender requirement.
The lease began July 1st We were the prior occupants so no rental history. And as far as debt to ratio, according to a nifty FHA calculator I found, we are 25k in house price above what would be allowed if our rental income were to not be counted.
The lease began July 1st We were the prior occupants so no rental history. And as far as debt to ratio, according to a nifty FHA calculator I found, we are 25k in house price above what would be allowed if our rental income were to not be counted.
Would your tenants be willing to lengthen the time on their lease?
I hate to say it but you may have a real problem. Most importantly speak with your lender/broker immediately and let them know what is going on! They know your situation and are in a better position to give you sound advise based on your particular variables. Good Luck!
As was recommended, asking on the forum is good... but you should call your lender ASAP.
The guidelines are not set in stone, its the risk level considering your credit, income, employment history, reserves, down payment and the rental that the system and underwriters will look at. Even a 12 month lease agreement could get denied if there are enough other risk factors.
This is why it is important to have good communication with your lender and work with someone that knows the questions to ask. This sort of thing might make no difference or it could be an item that derails the whole process.... call the lender ASAP and have them notify the underwriter so they can review it.
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