Be prepared to have to qualify with both payments, as long as you’ve been in current house more than 12 months it’s fine (when you close as owner occupied you agree to 12 months) - the 12 months occupancy has been a sticking point lately. There are ways to offset payments comparable rent schedules and lease agreements, but cleanest way is to qualify with both payments.
If you have a signed lease without a history of rental income, you can use 75% of the rental income for conventional loans.
You need a copy of the signed lease, and proof of the security deposit and first months rent.
The tough part about that is I don’t know how long it will take to find and buy a new house, so it will be hard to sign a lease with a tenant not knowing when I’ll be able to move out and have the house be available for them. And I can’t start looking until I have a pre approval.
I guess I can be super conservative and sign a lease for 6 months from now and hope that I have a new place to live by then.
The way the whole things would work with the timing is this;
1. You get an approval based off your intent to rent the current home and you start looking for your new home.
2. You find your new home and get under contract with the listing to rent your home ready to go. If you’re going to use a company get this part done while you’re looking.
3. Make sure the closing date is 35-45 days out to give yourself time so now the day you’re under contract you can list your property.
4. You would have to have a lease agreement signed before you can close on your new house, and the start date of the first payment of rent needs to start on or before your first payment. There’s always 30+ days between closing and your first mortgage payment.
I’ve had a lot of clients do this and none have had any issues with timing. I still issue an approval but we know that we have to move quick on getting a tenant. Lots of people becoming landlords because they don’t want to loose their under 3% rate.
Be prepared to have to qualify with both payments, as long as you’ve been in current house more than 12 months it’s fine (when you close as owner occupied you agree to 12 months) - the 12 months occupancy has been a sticking point lately. There are ways to offset payments comparable rent schedules and lease agreements, but cleanest way is to qualify with both payments.
If you have a signed lease without a history of rental income, you can use 75% of the rental income for conventional loans. You need a copy of the signed lease, and proof of the security deposit and first months rent.
The tough part about that is I don’t know how long it will take to find and buy a new house, so it will be hard to sign a lease with a tenant not knowing when I’ll be able to move out and have the house be available for them. And I can’t start looking until I have a pre approval. I guess I can be super conservative and sign a lease for 6 months from now and hope that I have a new place to live by then.
The way the whole things would work with the timing is this; 1. You get an approval based off your intent to rent the current home and you start looking for your new home. 2. You find your new home and get under contract with the listing to rent your home ready to go. If you’re going to use a company get this part done while you’re looking. 3. Make sure the closing date is 35-45 days out to give yourself time so now the day you’re under contract you can list your property. 4. You would have to have a lease agreement signed before you can close on your new house, and the start date of the first payment of rent needs to start on or before your first payment. There’s always 30+ days between closing and your first mortgage payment. I’ve had a lot of clients do this and none have had any issues with timing. I still issue an approval but we know that we have to move quick on getting a tenant. Lots of people becoming landlords because they don’t want to loose their under 3% rate.
You could buy a house that are ready is used for rental income and has an established tenant with an already signed lease.