Multis after the first year

9 Replies

Hi Maine people,

Here's a silly question- say I'm going to purchase a move-in ready retail-priced duplex to live in. After the first year I decide to move out, say it cashflows but only slightly (200 a month?). Will I be allowed to take out another mortgage since this one is producing income? How do lenders evaluate your debt to income in that case?

Much thanks!

It all depends on your lender. To give you a short and quick answer, yes. Likely after only one year the balance on the mortgage will count as debt and you haven’t had the income long enough for it to count toward the income portion of that ratio.

My understanding is that it’s like getting a new job. Somewhere around 2 years most banks will start counting the income from rentals toward that ratio.

There isn’t anything that says you can’t have two mortgages. As long as you can convince your lender that the first place is self supporting and you’re actually making money on it, they’ll give you another. Sit down and interview a few lenders. Explain your situation and see who is willing to work with you.

This is a question I have as well. If anyone has any recommendations for mortgage lenders in Maine who have experience/are good to work with for folks with income producing properties that are seeking a home mortgage, I'd appreciate specific recommendations.

The answer can verify depending on your specific situation and type of loan. But, the quick answer is yes, you can take out another mortgage. There is typically a one year required seasoning period for small multis (conventional/gov't mortgages). The rental income (as well as the debt) is counted towards your debt-to-income if you get a new property and mortgage in year 2. I think they count 75% of your gross rents towards your income (don't quote me on that).

The best and easiest thing to do is contact a good mortgage loan officer and they can run some scenarios for you based on your situation. Let me know if you want a referral for a good loan officer.

We just had to provide a signed lease (even month to month) and they count 75% of the rental income to offset the mortgage payment on the property for debt to income ratios.