How to Buy Primary Homes and Eventually Retire with Little Down

Primary residences usually are the easiest to obtain with the least down payment requirements.

Some think they can purchase their way to wealth through primary residences, but in realty for most buying a home can be a huge cash flow hemorrhage unless if there multiple units to rent, future market rental prospects that have been mapped out, and structuring the income correctly via the tax returns so it supports your ability to qualify for your next residence.

It can be a lucrative opportunity or a blunder depending on how its structured.

There are also a lot of guidelines that restrict you from buying another primary residence each year such as payment reserve requirements, credit requirements, debt to income ratios, buy and bail provisions that require you to have 25-30% equity in the current home in order to use rental income offset when qualifying for another home, and more.

Its important to plan these aspects above so that when you go to apply for your second, third, or fourth primary the requirements above are not only met but the occupancy issues are not triggered.

More on "occupancy," below....

The problem with move-up primary residence RE investors is that occupancy can be triggered and it is a grey area in that the underwriter has to believe that you will be occupying the property. Hopefully you are because otherwise it would be considered mortgage fraud. The general provision for conventional loan is that the buyer is required to move into the property within 60 days of closing to conform to the loan note. Some of the areas the underwriter will look at to substantiate occupancy are:

- driving distance to your work and factor in traffic time however a good letter of explanation can make this a deal or a deal breakever depending on the circumstances

- employer/employment conditions - some telecommute and work at home, some only have to come in certain times of the month, or travel for work so documenting this and addressing it in your motivation letter is important

- the size, amenities, rooms, bathrooms, and etc of the current primary versus the new proposed primary

- the intent in the scenario so if you have a lease agreement signed and evidence of security deposit it shows your intent in renting out your current property in trying to purchase the new proposed property

- a great motivation letter with compelling emotional and factual info that caters to elements of a "primary residence," within mortgage underwriting guidelines

- documentation back up can sometimes help because some of the trends are counter intuitive especially for seniors who are moving down from larger residences to smaller residences which is typically in the past "not," allowed as primary residence but guidelines are easing to this natural demographic shift especially with the above items carefully documented in the file

Hope that helps let me know if you have any questions on this topic, it always comes up day to day.