Can I keep my condo and buy a house at the same time? (mortgage, mortgage)

[JCE02]

Hi, my husband and I bought our condo in 2006 and are still slightly underwater. We have been renting it out the last 2 years which almost covers our mortgage. Since then, we have been renting a house with a $2100 monthly payment. We would like to buy a house in the 275-300K range within a year and ideally keep our condo. We make about $165K combined and have average credit scores. Is this doable? I would think because we have been on time every month with a $2100 rent payment, the mortgage program would take that in their analysis that we could afford roughly a $2100 mortgage payment while still keep our existing condo. Any insight you can share would be appreciated!

[MrRational]

Originally Posted by JCE02

bought our condo in 2006 and are still slightly underwater.
We have been renting it out the last 2 years which almost covers our mortgage.
We would like to buy a house... and ideally keep our condo.

Selling the condo would be the simplest path... even with a slight loss.
It might even be the wisest use of your assets, credit & risk.

Right now the slight loss (relative to market) is the market itself.
It's recovering but still has room in many areas to expand before reaching 2006 highs.

Three years from now the market should recover even more but you'll then have
five years of rental use and other wear & tear conditions, worn out fixtures, etc...
all of which are very likely to still keep you in a "slight loss" position. Follow?

...the mortgage program would take that in their analysis...

Of course they'll keep lending; the mortgage brokers love people like you.
The only question is about the rate and fees you'll have to pay.

If you LIKE being a landlord... look for a property better suited to that.
Something that will at least pay enough to cover ALL of the mortgage and other ownership costs.

[unihills]

I think the lender will qualify you on certain debt to income ratios. You don't get any "extra credit" for paying your bills on time, but they will ding you for late payments. I hear a lot of lenders only give you 75% of the rent as "verifiable income" to allow for turnover, etc.

Add up your debts, determine what % of your gross income they are, and check the lender's required maximum debt to income ratios for house payment debt as well as total debt service.

I think a lot of lenders use 28% of gross income as max house payment and 35% as max total debt service.

[thelopez2]

Originally Posted by JCE02

Hi, my husband and I bought our condo in 2006 and are still slightly underwater. We have been renting it out the last 2 years which almost covers our mortgage. Since then, we have been renting a house with a $2100 monthly payment. We would like to buy a house in the 275-300K range within a year and ideally keep our condo. We make about $165K combined and have average credit scores. Is this doable? I would think because we have been on time every month with a $2100 rent payment, the mortgage program would take that in their analysis that we could afford roughly a $2100 mortgage payment while still keep our existing condo. Any insight you can share would be appreciated!

They'll go by your tax returns for calculating your rental income and expenses. Doable, possible, but more calculations are needed.