Second home, Investment or Not?

Question

I just bought my first home two months ago. My loan officer required me to put 10% down on it. I already want to move, but I want to keep it for an investment. I know I can rent it out enough to cover the payment on it. My question is, if I go to by a new house to live in, will my loan officer require 10% or 20%. He said that they require 20% for investment properties, but my new house that I buy wont be an investment, I will live in this one.

Answer 1

if you can proof you are moving into the new home than you should have little trouble, it is just a matter of explaining the situation the the lender. like maybe you are getting something bigger or closer to work, it has to make since.

Answer 2

Go to another lender. Even if you claim you'll live in the new house, your current loan may have a requirement that you occupy the home for a specified period (not forever, but probably at least a year). Check your current mortgage documents. If your current lender sees this, it might raise a red flag.

Also, before you jump into a new property, make sure you have a handle on all of the expenses beyond the mortgage payment (taxes, common utilities, maintenance, insurance (which will be higher on an investment prop), vacancy allowance, and replacement reserves.

Also, keep in mind that a new lender will not recognize all of the "rent" as potential income, usually 75% to 80%. This means that the down payment requirement may be higher because if rent does not cover 120% of the expenses related to the old home, less of your income will be recognized for the new mortgage application because of the existing debt.

Run the numbers very carefully.

Answer 3

If you do not want to count the 2nd as investment ,
Then you have to refi the 1st for investment .
You can NOT have 2 primary residence loans , only one .

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