Wednesday, 24th of September 2008 at 09:00:52 AMOnce again, there is an adjustment in the requirements of the FHA Underwriting. This one comes about because of the buy and bail tactic that is becoming popular. It’s disappointing that we have to continue to make getting a load so much more harder.
Basically, a person buying a new primary residence that plans to rent their current property out cannot use rental income from the current property to qualify for the new home purchase. This is to prevent the practice of “buying and bailing” where the borrower intends to cease payments on their current mortgage after moving into the new home. It’s been happening already and now HUD is putting a stop to it.
The buyer must either have sold their current property already or they will have to qualify (debt to income ratio) to take on both mortgage payments. The only real exception is if the proposed rental property has at least 25% equity and the owner’s employer required a relocation for employment.
This change once again points out how critical it is to communicate and work with your lender when searching for and buying a new home. The rules are changing on a daily basis.
Thanks Spencer Anglin for the head up on this change.
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