Purchasing a second/investment home? (5%, income tax, mortgage, mortgage)

[Tasksgirl]

Hi - I have a home buying question ..

I want to purchase 2 homes in Texas - one for my husband and I - and another one as an investment property which we would rent to my in-laws to help them out (MIL has worked 2 jobs while sick for 20+ years and we are an extremely close family - but we currently live in CA where home ownership has not been possible).

Assuming husband and I make a combined $80,000 a year before taxes, and the homes are as follows:
Our home - $140,000 home - $20,000 down payment = $120,000 loan
Investment home - $100,000 home - $10,000 down payment = $90,000 loan

First of all - would we qualify? Does the "home should not equal more than 3 times yearly income" rule still apply with 2 homes? How would this be possible? Is it possible to buy 2 homes at once or would one have to be purchased after the other? Is it better to buy the investment property first or the primary home first? What are the tax differences from having the investment property? Or is it better to purchase the home as our "second" personal home?

Thanks in advance

[kevcrawford]

Depends on your lender. Most are requiring a minimum of 20% down for investment properties, if not more. Depends on your credit, income, etc.

[Tasksgirl]

Is there a time limit between purchasing the 1st home and investment home?

[HappyTexan]

No..you just have to qualify and have the money down.

[Tasksgirl]

Can anyone else please help me out with some advice??

[CAugust]

Originally Posted by Tasksgirl

Hi - I have a home buying question ..

I want to purchase 2 homes in Texas - one for my husband and I - and another one as an investment property which we would rent to my in-laws to help them out (MIL has worked 2 jobs while sick for 20+ years and we are an extremely close family - but we currently live in CA where home ownership has not been possible).

Assuming husband and I make a combined $80,000 a year before taxes, and the homes are as follows:
Our home - $140,000 home - $20,000 down payment = $120,000 loan
Investment home - $100,000 home - $10,000 down payment = $90,000 loan

First of all - would we qualify? Does the "home should not equal more than 3 times yearly income" rule still apply with 2 homes? How would this be possible? Is it possible to buy 2 homes at once or would one have to be purchased after the other? Is it better to buy the investment property first or the primary home first? What are the tax differences from having the investment property? Or is it better to purchase the home as our "second" personal home?

Thanks in advance

Let me understand you here, you tak home 80k a year and want to finance a total of 210,000 ? ok......

so if the mortgage was at say the lowest possible rate being 5% - that would make your monthly payments approximately...$1259.06, that does not include your taxes, pmi and homeowners insurance though. Your monthly take home is approximately $6,666 (odd huh? is this a sign???) Let's add another $1,000 per month for all that, So you are outlaying $2260 which leaves you with $4406 or $1,000 a week. If my math is correct, looks like you could afford that. That is based on a 5% mortgage.


Go and see a mortgage broker to know if you will qualify - there are so many variables no one can tell you on a mb

[TimtheGuy]

Originally Posted by Tasksgirl

Hi - I have a home buying question ..

I want to purchase 2 homes in Texas - one for my husband and I - and another one as an investment property which we would rent to my in-laws to help them out (MIL has worked 2 jobs while sick for 20+ years and we are an extremely close family - but we currently live in CA where home ownership has not been possible).

Assuming husband and I make a combined $80,000 a year before taxes, and the homes are as follows:
Our home - $140,000 home - $20,000 down payment = $120,000 loan
Investment home - $100,000 home - $10,000 down payment = $90,000 loan

First of all - would we qualify? Does the "home should not equal more than 3 times yearly income" rule still apply with 2 homes? How would this be possible? Is it possible to buy 2 homes at once or would one have to be purchased after the other? Is it better to buy the investment property first or the primary home first? What are the tax differences from having the investment property? Or is it better to purchase the home as our "second" personal home?

Thanks in advance

You should look at going the minimum down on the home you will occupy (3.5% FHA/5.0% conventional) because you will need a minimum of 20% (25% down will get you a better deal) on the investment property.

You will have to buy the 2nd property as an investment property. You will not be allowed to call it a "2nd home".

[mathjak107]

this is correct...... theres a big difference in tax treatment whether its a rental or whether its a 2nd home, they are not the same thing

[Humboldt1]

Buy one home and live there 30 days and then buy another home and live there 30 days. You can choose which one you want to rent and can call both owner-occupied. You don't need to call either "investment real estate."

[mathjak107]

you need to have them in the same tax jurisdiction otherwise i think it matters as to which one sees 180 days of usage.... as an example new york city has a city income tax... you may have a vacation home in another part of the state, even in suffolk county ... nyc will put you under a microscope if you have any earned nyc income and claim the other home as your primary