Mortgage For Primary Residence vs Investing

4 Replies

Hello Guys,

I have a few questions about Mortgage situation.

Im planning on buying my first REI.

I dont own any RE right now, my plan is to buy and hold a property and keep living where I am right now.

my question is that, if the property im planning to buy is classified by the lenders as a REI and not as a Primary Residence, will the mortgage conditions will be diffrenet? im sure that i cant have the same down payment as an FHA but how much is an average percent of down payment they could ask for, If its not going to be my primary Residence but its gonna be the first mortgage l take. 

(all the posts ive read talk about the lenders risk of giving the person 2 mortgages, one for his primary home and one for his investment and therefore they take a bigger risk. my situation is that l want to use my first mortgage as an REI.)

@Assaf Perets I did exactly that for my first mortgage. The only difference for me was that they asked for 25% down minimum. Other than that everything was same. 

Most banks will however consider 75% of the rent that you will receive from the property as income. So, the remaining 25% + the rent that you are paying for your residence will be considered against your DTI. This could be different from bank to bank. For me that was the case. Hope this helps.

Originally posted by @Pancham Gupta :

@Assaf Perets I did exactly that for my first mortgage. The only difference for me was that they asked for 25% down minimum. Other than that everything was same. 

Most banks will however consider 75% of the rent that you will receive from the property as income. So, the remaining 25% + the rent that you are paying for your residence will be considered against your DTI. This could be different from bank to bank. For me that was the case. Hope this helps.

Got it. Thanks a lot! I do the math and if I use the Primary Residence Loan and put 5% down, leaving the house empty for a whole year and pay the mortgage, its still much more cheap for me rather than put the 25% down. I heard about pepole that rent the house rather than live in it and its mortgage fraud....is there anyway to rent the house, even on a cheaper amounts and make it legal? in all the cases id rather to take the Primary residence mortgage and leverage my money as much as possible

Leaving the property empty will not change the bank requirements of 25% down.

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