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Will lenders consider rental income when trying to qualify for a second loan?
My husband and I would like to buy a house and rent out our condo. We can put down 5% and both have over 750 credit scores. Our income is pretty high but we're worried we won't qualify because of our first loan. I understand some lenders used to count 75% rental income towards your income but not anymore. Do any lenders allow a flexible debt/income ratio?
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Answers
Lending standards have really tightened up following the economic meltdown. Lenders want more of the borrowers skin in the game. Therefore, required down payments have moved up toward 20%. Each lender has different requirements, and even the same lender may vary depending on their portfolio.
It would be a good use of your time to go to 2 or 3 lenders to get prequalified for a loan. It is then that you will learn the answers to your questions. It's better to work from a place of certainty than guesswork.
McGuire has a vast network of sales associates who deal daily with questions just like this. Our agents tend to know which 'lenders' are best at a given time. Perhaps they'll provide further insight. Good luck.
By Charles Moore