Questions often come up regarding the requirements to convert a primary residence to an investment property and purchase a new primary.
- Up to 75% of the rental income may be used to offset the mortgage payment in qualifying if there is documented equity of at least 30% in the existing property.
- The lender must document the borrower’s equity in the existing principal residence with an appraisal, automated valuation mode or Broker Price Opinion, minus the outstanding liens.
- The rental income must be documented with a copy of the fully executed least agreement and receipt of the security deposit from the tenant and deposited into the borrower’s account.
If the 30% equity in the property can’t be documented, rental income may not be used to offset the mortgage payment. The borrower will need to qualify with payments for both properties. The borrower must also have 6 months reserves (PITIA) for both properties.
Mortgage Rates are as follows
30 YR: 3.5%
15 YR: 2.75%
30 YR Jumbo: 4.25%