What is considered a second home?

[oreothemountaindog]

I had to move for my job in 2009. We own a home in Texas but could not sell it due to the crap housing market so we have had it rented (at a profit!) since we moved. We report the income on our tax returns.

 

We are currently renting at our current location but would like to buy a house. Would the new house be considered a second mortgage and have to be done conventional with 20% down?

 

 

[Brian B The Loan Professor]

I had to move for my job in 2009. We own a home in Texas but could not sell it due to the crap housing market so we have had it rented (at a profit!) since we moved. We report the income on our tax returns.

 

We are currently renting at our current location but would like to buy a house. Would the new house be considered a second mortgage and have to be done conventional with 20% down?

No it would be a primary residence and if you have been showing the income from rents you can use that to offset the debt ratios. You should be able to use whatever loan types are available to you where you are buying.

B

[jmf8756]

We are doing FHA for our new home and were told we could only keep our original home (conventional mortgage) if we had 25% equity in it.

[jop3]

We are doing FHA for our new home and were told we could only keep our original home (conventional mortgage) if we had 25% equity in it.

 

 

This is likely because you don't qualify with both payments in your debt to income ratio. If you can qualify with both payments, then there are no issues.

[jmf8756]

We are doing FHA for our new home and were told we could only keep our original home (conventional mortgage) if we had 25% equity in it.

 

 

This is likely because you don't qualify with both payments in your debt to income ratio. If you can qualify with both payments, then there are no issues.

 

They said it wasn't a debt to income issue. They said they required at least one of the mortgages to have at least 75% equity regardless of debt to income. Should I be investigating this further? We still have not sold our house and are thinking about backing out of the new home because of this.

[LLee]

I believe you have been misinformed as we own a home that we are a good bit underwater on and had to rent it out to move out of state for work transfer and we just bought a new home with an fha loan where we moved to to be our primary residence. We have no equity in either home but had no problem getting the loan for the new home. We did qualify for the new home loan without counting our rental income though since its been less than two years as a rental...good luck...

[jop3]

Yes, you should investigate further. That's not an FHA requirement, sounds like their own lender guideline.

[bartprequalifies]

Here some guidelines that might be of help:

 

If your current home has a FHA mortgage on it and your looking to purchase a new primary residence with FHA financing, guidelines are as follows:

 

1. Purchase must be due to a job relocation that would otherwise require you to commute over 50 miles one way.

 

2. Change in family size: Your family has now outgrown your current home, or you're now an empty nester and looking to downsize.

 

3. If you don't have enough income to qualify with both mortgages: You need 25% equity in home or to have paid down the original loan amount by at least 25%. (The latter would require an appraiser to do a rent roll/schedule to verify average rental rate in area, but no appraisal would be necessary.) The former/first will require a full appraisal to verify the 25% equity.