I am wanting to possibly buy a house , but would like to rent out a couple of rooms in trade for being able to afford a larger house with a better location. Do banks approve people for larger mortgages if the house is a partial rental, but also where I would live?
2006-10-13 05:15:46 · 5 answers · asked by amy l 1 in Business & Finance ➔ Renting & Real Estate
If you get a two-unit, it can still be considered your primary residence, which means lower rates. Any more units than that it's considered an investment property. To be able to use income from an investment property to qualify you, you need a 2 year history of owning these. Due to the higher rates for investment property loans AND not being able to use the income from the rent to qualify you, the bank will probably have to do a "stated income" or "no-doc" loan. You'll proably need at least 5%-10% down.
2006-10-13 05:25:43 · answer #1 · answered by KL 5 · 0⤊ 0⤋
Yes.
These are done frequently and would be treated like a multifamily / residential real estate loan. In most cases the lender will allow 75% credit for whatever you receive for rent as qulaifying income. You would need a rental agreement to be submitted with the application.
2006-10-13 12:49:51 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Unfortunately, you cannot use your future roommate's rent to offset your payment. The reason being is, that the underwriter who approves the loan will not accept the rent as income, since there is no guarantee that you will receive that rent in the future.
2006-10-13 12:41:28 · answer #3 · answered by Justin 3 · 0⤊ 0⤋
Lending institutions grant loans based on collateral, and the person's abilty to repay the loan, not on speculation of potential income.
2006-10-13 12:20:33 · answer #4 · answered by WC 7 · 0⤊ 0⤋
Ask the bank, because all mortgage lenders have their own rules!
2006-10-13 12:19:40 · answer #5 · answered by backinbowl 6 · 0⤊ 0⤋