Are you considering purchasing a new home, but already own a property and are worried about not having enough income to support two house payments? You’re not alone. This is a common concern for many homeowners who are looking to upgrade their living spaces. However, there are options available to you that can help you make the transition to a new property while keeping your current home…

One of the most popular options is to rent out your current property and use the rental income to qualify for a new mortgage. Most mortgage companies offer this option based on your down payment, income, credit score, and debt-to-income ratio. Additionally, organizations like Fannie Mae and Freddie Mac allow you to rent out your current property and use up to 75% of that rental income to qualify for a new mortgage. For instance, if you can rent out your current home for $3,000 a month, the lender would provide you with 75% of that amount, which is $2,200 a month for 12 months. This reduces your monthly liability, making it easier for you to qualify for the new mortgage payment. However, there are some things you should consider before opting for this option. You must be able to manage the responsibilities of being a landlord, including finding tenants, collecting rent, and maintaining the property.

Additionally, you must be prepared for the possibility of vacancies and unexpected repairs, which can impact your rental income and ability to qualify for a new mortgage. If you want to keep your current home but lack the down payment to acquire a new property, you can consider options such as cash-out refinancing or getting a home equity line of credit. Cash-out refinancing allows you to refinance your current property and extract cash to purchase a new home. On the other hand, a home equity line of credit allows you to borrow against your home’s equity to purchase a new property.

However, this is only feasible if you have enough equity in your current property to support at least 20 to 30% equity after the new mortgage. However, if you don’t have enough equity in your current home, you could still rent it out with a 12-month lease agreement, but you would need your funds to purchase the new property, borrow against a 401K, or explore the possibility of gift money. This is a viable option if you’re not ready to sell your current property and want to retain it for future investment purposes. In conclusion, there are several options available to you if you’re looking to purchase a new home but already own a property. Renting out your current property and using the rental income to qualify for a new mortgage is one popular option. However, you must be prepared to manage the responsibilities of being a landlord and the possibility of vacancies and unexpected repairs. Cash-out refinancing and home equity lines of credit are also viable options if you have enough equity in your current property. If you’re not ready to sell your current property, you can always rent it out and use your funds or explore alternative financing options. Whatever you choose, make sure to weigh the pros and cons and consult with a qualified loan professional to ensure you make the best decision for your financial situation.

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