Removing Roadblocks to Homeownership – I Want My Dream Home


Filed under: Borrower Tips


Today’s topic applies to people who might already own a home, but they are preparing to buy another property. The move could be “rightsizing” to a bigger or smaller home, or a sideways move to a house in another location. Timing is everything, and people can get caught in the timing issues trying to figure out how to make it work.

Renting the First Property

One option is to keep your current home and convert it into a rental property to let it work for you. Then buy the next home to fit the needs of your family. The main question that comes to mind is: how will I qualify for both mortgages?

Keep in mind that each situation is unique and there are different programs to consider. Generally speaking, a regular, conventional loan will allow you to immediately count the market rent of the first property in the calculations for mortgage approval on the second property. 75% of the estimated rent can be used to offset the mortgage payment for the new home.

Cash for the Down Payment

In this second scenario, it can be a bit of a trick if you won’t qualify for both mortgages and you need the cash to use as a down payment on the new home. The best thing that you can do is be teamed up with a great real estate agent that understands the negotiations. In most cases, you will be making a contingent offer. Everything is negotiable, which is why you need a good real estate agent for support.

Some people already have the cash in hand for the down payment, but they don’t make enough to qualify for both mortgage payments. Conventional guidelines allow the financing to be possible if you are under contract on the home you are selling and contingencies are released. Then the original mortgage payment can be ignored, making it possible to qualify for the new mortgage.

We work with people who are in this situation. It takes a little bit of creativity sometimes, but our team at Franklin Loan Center is here to help you find the right solution for your financial needs. Talk to me if you would like personal recommendations.


Franklin Loan Center | NMLS 237653
Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, 4131316
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