New to Real Estate · HI · Member since 2023 · 17 posts · 2 votes
Dear Investors,
I’m just staring out on my investment journey and I would like to hear your opinions on how to get qualified for a second mortgage as a primary residence.
I’m currently living in the property that I have purchased last year in the big island. I’m on the conventional loan. I have a steady income and good credit history. And I’m considering to purchase another property sometime next year in Honolulu as my primary residence and planning to rent out the current one that I’ve lived in. I’ve talked to my lender about this. She suggested that I will have to rent out the current one in order to get qualified for the second one as my primary residence. My question is: Is there another option for me? As I do not want to rent out my place yet and looking for rent another place while waiting for the loan to get approved.
Realtor · Sebastian, FL · Member since 2018 · 53 posts · 30 votes
2y
It's always a good idea to speak with multiple lenders, which I would suggest to you.
I'm assuming your lender said you need to rent out your existing home because most likely your DTI won't qualify you for two mortgage simultaneously. But, which is why you should check with multiple lenders, the criteria to rent out doesn't necessarily mean you move out now. Most cases you can have a lease agreement in place for after you close on the new home, or the lender may go off market rent calculations for your existing home to determine how much of that existing mortgage payment can be removed from your DTI calculation when applying for the new loan. All of this can be done without you having to move out of your current home is the point...
As for doing second home loan, you have to factor in it will cost more because interest rates will be higher. You will also have to put more money down on the purchase vs a loan for primary residence if that's a concern to you or not. But, more importantly it sounds like you're planning to buy this second home near where you currently live. In most cases, you will not qualify for a second home/vacation home mortgage anyways with it being so close to your primary residence and it would have to be structured as an investment/rental property which would have even higher loan costs.
Point being, work with a lender that can help you navigate the renting out of your existing primary residence for after you close on the new home, and just go ahead and purchase the new home as a primary residence to save yourself trouble and more importantly money!
Realtor · Sebastian, FL · Member since 2018 · 53 posts · 30 votes
2y
It's always a good idea to speak with multiple lenders, which I would suggest to you.
I'm assuming your lender said you need to rent out your existing home because most likely your DTI won't qualify you for two mortgage simultaneously. But, which is why you should check with multiple lenders, the criteria to rent out doesn't necessarily mean you move out now. Most cases you can have a lease agreement in place for after you close on the new home, or the lender may go off market rent calculations for your existing home to determine how much of that existing mortgage payment can be removed from your DTI calculation when applying for the new loan. All of this can be done without you having to move out of your current home is the point...
As for doing second home loan, you have to factor in it will cost more because interest rates will be higher. You will also have to put more money down on the purchase vs a loan for primary residence if that's a concern to you or not. But, more importantly it sounds like you're planning to buy this second home near where you currently live. In most cases, you will not qualify for a second home/vacation home mortgage anyways with it being so close to your primary residence and it would have to be structured as an investment/rental property which would have even higher loan costs.
Point being, work with a lender that can help you navigate the renting out of your existing primary residence for after you close on the new home, and just go ahead and purchase the new home as a primary residence to save yourself trouble and more importantly money!
I’m just staring out on my investment journey and I would like to hear your opinions on how to get qualified for a second mortgage as a primary residence.
I’m currently living in the property that I have purchased last year in the big island. I’m on the conventional loan. I have a steady income and good credit history. And I’m considering to purchase another property sometime next year in Honolulu as my primary residence and planning to rent out the current one that I’ve lived in. I’ve talked to my lender about this. She suggested that I will have to rent out the current one in order to get qualified for the second one as my primary residence. My question is: Is there another option for me? As I do not want to rent out my place yet and looking for rent another place while waiting for the loan to get approved.
Any insight would be much appreciated,
Ling
Hey Ling, I know a group of women here on Oahu that are investing on Big Island (I think two of them live there as well). I'll get you all connected. I'll send you some of their contact info and you can reach out. A few of them are really experienced but some are brand new as well. I think they might be a good fit for your network. :)
Nice to meet you. Ok sounds good! Thank you so much for the connection.:-)
Ling
I sent you their email address. Hope you all can get connected and good luck on starting your journey. Be sure to check out the Real Estate Rookie Podcast on Bigger Pockets as well. It will be a great way to accelerate your start! :)
Rental Property Investor · Rutherford, NJ · Member since 2015 · 2 posts · 0 votes
8mo
Great insights by everyone! Hope that Ms. Ling was able to buy her 2nd property in Oahu. I also have a related question.
I own one 3 unit mixed use LLC property in NJ (2 residentials on 2/3rd floor and 1 commercial on the 1st floor). My family live on 2nd/3rd floor and I do my education consulting business on the 1st commercial floor. Once my wife and I become an empty nester, I would like to rent 2 units and buy a primary condo in Waikiki as my primary residence and retire. Could this be possible? Or should I lease out all current units for better DTI? I might need to get 2nd mortgage as a senior in Hawaii. Or should I rent first and become resident of Hawaii and then apply for mortgage later on? Any suggestion would be helpful. Thank you.
Yes, this is very doable, but timing and structure matter.
Leasing out all units in your NJ property usually helps DTI the most and makes lenders view it clearly as an income asset. Some lenders will give partial credit even if you occupy one unit, but it is conservative and lender specific.
You can buy a Waikiki condo as a primary residence at retirement age. Lenders focus on income, assets, and DTI, not age. Retirement income, asset depletion, and rental income often replace W-2s.
Renting first in Hawaiʻi is optional. Residency does not change qualification. Stabilized leases and clean documentation matter far more.
Watch for Waikiki condo issues like high HOAs or non-warrantable buildings, which limit lender options.
Cleanest path: fully lease NJ property, document income, then buy Waikiki as a primary.
Ling, your lender is right that DTI is usually the constraint, not the number of homes. In many cases you do not have to physically move out first. Some lenders will allow a signed lease starting after your new purchase closes, or they will use market rent on your current home to offset the existing mortgage in your DTI. This is very lender specific, so talking to a couple of investor friendly lenders is key.
A second home loan usually does not work if the properties are on the same island and close together, so buying the Honolulu place as a new primary is typically the cleanest and cheapest option.
Bottom line: you may be able to qualify for the Honolulu home as a primary without renting your current place immediately, but you need the right lender and structure. Let me know if you'd like an intro to a local lender.
Rental Property Investor · Rutherford, NJ · Member since 2015 · 2 posts · 0 votes
8mo
Thank you so much for your quick reply, Duc. I've enjoyed your many insightful videos recently and great to hear from you here via BP. We are planning to visit Waikiki this summer for vacation so hope to learn more before the trip. You are definitely right about my timing and structure. Thank you again.