Can I get financing for another home?

Question

We currently own a house that's got 43,000ish left before it's paid off.  We have been trying to sell the house, but i've been thinking, it will be paid off in 10 years, why not keep it as an investment home.  In the mean time, if we say that will remain our home and we want to get a second home for investment do you think we'd get approved for a second loan and a guess of how much...

We make about 53,000 between us...
Our current mortgage is $450.00
We have 6 credit cards but only 2 have balances but unfortunately they both are just barely over half way of the credit lines (example: 3000$ credit line, and it has $1700 which is more than half) I know that's regarded as high balances.  We each have a loan which total up to 5,000.  We would love to be approved in  the $150,000 range.  She has been at her job for a steady amount of years and makes about 18$ an hour.  I have just moved from another state and have only worked at my new job for 6 months making about $9 an hour.  I've tried to give you all the info you'll need.  Oh yeah, our social security numbers are...just kidding. If you need more info let me know. Down payment isn't an option at the moment by the way, but let us know your ideas please!

Rush is a band · Accepted Answer

Even if you can get financing you had better seriously figure out if you can truly afford it.  I doubt that you would get a 0 down loan for $150,000 right now anyway.  

You would actually be better off telling the bank you are going to keep the current house and rent it out.  If you tell them that you want to buy a house for an investment, there is no way to avoid a downpayment.  There may be no way to avoid a downpayment anyway right now.  They will also include a percentage of the potential rent as income (maybe about 60% of potential rent).  

Rule of thumb for a mortgage is to not exceed between 2x-3x your annual salary, which is a range of $106,000 - $159,000.  The $150,000 you want is on the upper end of that range.

Dig one layer deeper and what they really want to see is that your mortgage doesn't exceed 28% of your gross monthly income and that your total debt payments don't exceed 36% of your gross monthly income.  There was a period of time when these ratios were relaxed significantly and that has driven us to the crisis we're in today.  So, 28% of your gross income is $1236 per month.  That has to include interest, principal, taxes, insurance and PMI (private mortgage insurance).  The real wild-cards in figuring out affordable amounts are real estate taxes and your credit (goes into the interest rate).  

36% of your gross income is $1590 and all of your payments need to fit under that - mortgage, all loans, credit card minimums, etc.  To borrow the maximum for a house all your loans need to fit within $354 a month.  If your loans, car payments and credit card minimums exceed that amount, you'll need to pay things down to get to that point.  

That's the financial side, now onto the 'human' side.  Are you going to advertise the house, collect the rent, answer the phone at 4am, etc.?  Are you going to hire a property management firm?  What will you do if the house sits empty for 3 months.  What will you do when the rental house needs a new roof and a new furance?  You have to plans in place for this kind of stuff or risk getting wiped out in a hurry.  

good luck!

Siver ChaCha · Answer

If you have enough equity in your CURRENT property it might be possible. But if you have to refinance it for a down payment. Probably not. Have you looked at properties where you take someone elses's payments over. And you can even do that through a bank with no down payment. There are lots of options and still opportunity to still acquire  property. LOOK at every option. I bet one will work out for you.
Good luck!

Trending News

Can I get financing for another home?

2 Answers