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Old 07-28-2009, 06:42 PM
 
Location: Kauai
72 posts, read 318,874 times
Reputation: 51

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I have a job offer to move out of state but my home is not worth what I owe on it. I would be able to rent out my home without cost to me as my mortgage is low enough. Also, my husband and I make enough to pay the mortgage on both homes if needed. It would not be fun but we could do it. In the area we would be moving to the average price of a home is in the 400-500K range. We can come up with 10% down but 20% would take a lot more saving and I would miss the job opportunity. Is there any hope for us to buy putting 10% down? We both have excellent credit scores. I can't seem to find an answer and renting a home would be just as expensive as owning a home. Any info would be appreciated. Thanks.
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Old 07-28-2009, 07:28 PM
 
Location: Plano, Texas
1,676 posts, read 6,260,445 times
Reputation: 684
As long as your credit is excellent and you can qualify based on 2 mortgage payments, you should be able to buy a home with 10% down.
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Old 07-29-2009, 04:01 PM
 
Location: Washington
479 posts, read 1,766,591 times
Reputation: 249
Please correct me if I'm worng, but here are a few things to consider and additional information that I came up with:

I don't think having only 10% down will be an issue, in fact, 5% down might be okay?? My understanding is that if you dont have 20% equity in your first house, you might have to proove 6 months of reserved cash. Also note that when you figure out your debt to income ratio, you can only count 75% of the rent as income.

Question: does anyone know what the maximum amount of debt to income allowed is now?

I thought I might have heard that you can only go up to 41% debt to income ratio now. Not sure if that is for second homes purchases, all, or what. This shows how to calculate your debt to income ratio: http://credit.about.com/library/work...omeRatioWS.pdf
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Old 07-29-2009, 06:16 PM
 
Location: Plano, Texas
1,676 posts, read 6,260,445 times
Reputation: 684
Prple, i have seen loans approved with debt to income ratios up to 60%. If debt to income ratio is high, the applicant would need compensating factors to offset such as a low loan to value, lots of assets, good job history, etc...

I agree with you on the down payment, they could put down as little as 5%. More than likely they will not be able to use any rental income as income to qualify for the reason you state.
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Old 07-29-2009, 09:30 PM
 
Location: Washington
479 posts, read 1,766,591 times
Reputation: 249
Quote:
Originally Posted by VictorBurek View Post
More than likely they will not be able to use any rental income as income to qualify for the reason you state.
Do you mean that they won't be able to count any rental income towards the debt to income ratio because they don't have 20% equity?

I think I read somewhere that it can be used as income after a two year history of rental income. Does that sound right?
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Old 07-30-2009, 12:49 AM
 
Location: Kauai
72 posts, read 318,874 times
Reputation: 51
I am happy to read this... but the mortgage companies I have briefly talked to said that no one will discuss a second mortgage without 20% down. This is where the confusion is...
Thanks for the replies though!
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Old 07-30-2009, 06:28 AM
 
Location: MN
761 posts, read 2,911,647 times
Reputation: 438
Talk to different lenders. We just closed on a home and have our condo as a rental property, though we were approved to have both without the rental income, I still provided my lender a current copy of the lease from my tenant. Just have your paper work all together, and it should work out just fine.
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Old 07-30-2009, 06:37 PM
 
Location: Plano, Texas
1,676 posts, read 6,260,445 times
Reputation: 684
Quote:
Originally Posted by flygrl View Post
I am happy to read this... but the mortgage companies I have briefly talked to said that no one will discuss a second mortgage without 20% down. This is where the confusion is...
Thanks for the replies though!

If this next home will truly be your primary residence, you will be able to put down as little as 3.5% if the home qualifies for an FHA loan or as little as 5% if you must use conventional financing. Whoever told you that you must put down 20%, make sure you dont call them back as they are giving you bad information.
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Old 08-01-2009, 07:35 AM
 
Location: MID ATLANTIC
7,464 posts, read 17,099,618 times
Reputation: 7863
The rule is an attempt to minimize "Buy and Bail" transactions. Fannie, Freddie and FHA, will no longer give you credit for any rental income on the current primary residence (soon to be former residence) to qualify for a new mortgage. Buyers were picking out their new home at bargain prices, then mailing the keys on the former home into their lender.
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Old 08-01-2009, 09:31 AM
 
Location: Houston
36 posts, read 134,484 times
Reputation: 24
If you can prove that you have to move to this new house you would be buying is purely because of change in job, you can get a mortgage on this one as per the primary house guidelines. probably you will need to submit a appointment letter from your new emplyer and they need to confirm that it would be a full time job.

If you purchase this as primary home then you can go ahead with it for as little as 3.5% as down payment on FHA loan. But looking at the loan amount it might prove to be very expensive for you with 1.75% upfront premium which is ofcourse rolled into your loan amount as well as there would be fixed MI of 0.55% which will be much reasonable that what you would otherwise have to pay in conventional loan. Moreover, if i can guess you would be buying this home in AZ which as per most of the mortgage companies is a declining zone.

Getting a 95% loan on conventional for this can be difficult or even if you do the rates will be on a very high side comparatively. Doubt if there would be any Private mortgage insurance companies who will provide their services to bear that risk.

The best in you scenario would be to check for FHA loan. Anything above $417000 is considered to be a Jumbo loan and the rates can be as high as 6% However do check the county limit for a loan and if it is above 417000 then you can qualify for High-balance loan in FHA.
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