Many people today are living in the current house they own but they want to take advantage of today’s bargain house prices and qualify FHA loan with 3.5% down payment to buy a new home. And at the same time they want to rent out their current house and keep it, or they cannot sell their current house because they do not have enough equity. But many home buyers need to count the rent as income that they could get on their old house qualify for the new FHA loan. Here are the rules for counting the rent as income if you move out of your current home and plan to rent it and then buy a new home:
- To count the rental income on the house you are moving out of, you must have at least 25% equity. During the loan process an appraisal will be done to verify your current house has 25% equity and the FHA appraisal will also note the average rents for a house such as yours. You can then count 85% of the projected rent as income towards FHA loan approval.
- If you do not have 25% equity in your current house you are moving out of, you will have to qualify FHA loan with both housing payments; your current house payment and your new house payment of the house you want to buy.
These same rules also apply to conventional and VA home loans. So keep this in mind if you want to move out of your current house and buy a new house to take advantage of the huge price drops across California. Give me a call or email if you have any questions at all about these rules or other FHA, VA or conventional loan qualification, 858-922-7899, homeloan8@gmail.com
Here some up-to-date and current advantages of FHA loans:
FHA benefits
- Right now FHA loan interest rates are the lowest in 50 years, if not ever
- Maximum FHA loans across California can reach $729,750 in areas such as Los Angeles, Orange County, San Diego, San Francisco, San Jose, Santa Barbara and more. This means you could buy a $756,000 house with a 3.5% down FHA loan.
- FHA loan credit score only has to be 620 (call me if you need assistance improving your credit score)
- FHA loan down payment is only 3.5% and can be a gift from a relative
- FHA home loan requirements are very flexible allowing your debt-to-income ratios to be up to 56.9%.
Conventional loan benefits
- 3% down on Fannie Mae owned properties, this is called a homepath mortgage (read more about Homepath from my article here http://socalfhahomeloans.com/fannie-homepath-mortgage-great-option-to-buy-in-california/)
- Fannie homepath loans do not require a condo to qualify, no information on the condo is requested
- Conventional loans allow up to 10 loans for investors will multiple properties
- No up front mortgage insurance
- 5% down standard conventional loans available on any property (does not have to be Fannie Homepath property)
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and Homepath, FHA, VA specialist)
858-922-7899
We are a direct lender offering Homepath Financing.
Related posts:
- Get FHA Loan to Buy New Primary Home in California And Keep Your Current House
- Keep Your Current House and Apply for a FHA Loan to Buy a New Residence
- Renting Out Your Current House and Buying a New House With a FHA Loan
- Buying a Duplex With a FHA Loan – Rent From 2nd Unit Allows You to Qualify For More
- Get FHA Loan After Doing a Short Sale On Your Current Home
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