Author Topic: Mortgage affordability calculator if already have a rental property  (Read 435 times)

ysette9

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Long story short, we are renting out our old house for the time being while we rent in a new location, as a sort of test drive to see if we want to relocate permanently. In an idea state we would sell old house A before buying new house B. Looking ahead, I'd like to estimate how much house we could qualify to buy if we bought house B before selling old house A. I did a quick search online and couldn't find any mortgage calculator that allowed that extra detail. Do I need to speak to a bank to see how they would treat rental income on house A? I'd prefer some handy rules of thumb or an online calculator if at all possible.

six-car-habit

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Re: Mortgage affordability calculator if already have a rental property
« Reply #1 on: July 04, 2020, 01:45:06 AM »
   This is not a rule of thumb, but at a point in the past i bought a new primary house - while renting out the "old" house, which had a conventional [owner occupied] mortgage on it.  The mortgage broker for the new house wanted to see 2 years of taxes, showing that i claimed the income, in order to use 100% of the rental income on the old house, as part of my total income.

   As i did not have 2 years tax /  rental income / depreciation reciepts, they would not allow for the full amount to be claimed as income -- However, they verified what i was charging per the square footage was reasonable for the town, and agreed to use a figure of 75% of the rent, as income.
   Maybe your mortgage company / broker would allow you a similar percentage [ doesn't sound like you have been renting for 2 years yet].
   

ysette9

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Re: Mortgage affordability calculator if already have a rental property
« Reply #2 on: July 05, 2020, 10:24:27 AM »
I think I had read the 75% figure someplace a while back, so that makes sense. If we go down this path we won’t have had a 2-year rental history. I suppose I just need to talk to a bank.

affordablehousing

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Re: Mortgage affordability calculator if already have a rental property
« Reply #3 on: July 06, 2020, 12:56:12 PM »
Ditto on the bank methods. Be sure to document your tenants with a 12 month lease, and some banks may be more or less flexible if they are or aren't selling their loans. We worked with a bank needing CRA credit and holding their mortgages on their balance sheet, and so let us slide with showing one year history on tax returns and a new tenant on a lease.