you might have a hard time getting a mortgage of any value with 2 rental properties hitting the debt to income ratio-- especially since it won't be rented at the time of your closing (as you'll still be living there). Talk to your lender about that option before you get set on it.
Well B you may be smarter then the first mortgage guy i talked too at Webster Bank. He indicated to me all we needed was a rental contract and a deposit from the renters and he could use 75% of the rental income to include in our income when applying for the mortage. This would have qualified us for way more then we need.
Well he was dead wrong. Not only does it not count in the income, it also gets used on the expense(debt) side. It's a doulble negative.
Thank god I shopped around and found a guy who knew what he was doing. The government no longer allows banks to include rent for purposes of income when the rental property doesn't have atleast 30% equity in it. People were getting their houses and just walking away from the mortgage on the rental.
Right now we are very close to still qualifying. It's still in the works. It's not looking the greatest but he may be able to pull it off. He ran it with 5% down initially, i upped it to 10% down which should convince the PMI company's to insure the mortgage.
We'll see..if not we will wait it out 6 months or so, save even more money, get our scores up and try again.
It's gonna be a close one but if i was a betting man i would bet it doesn't go through.
If not we will just have to work on getting our credit scores up, mines ok hers is what is killing us. Our mid scores are 662 and 634.