Skip to content
Mortgage Brokers & Lenders

User Stats

100
Posts
29
Votes
Pandu Chimata
29
Votes |
100
Posts

Moving the primary home

Pandu Chimata
Posted Jan 3 2024, 22:33

Hello team, I currently own a house and been living since 13 years. Its time to downsize as kids moved out of the house. 

If I buy another house/condo, smaller than I live currently , would that be considered as a primary home? How does the lender treats my next home as a primary home and what kind of documentation I need to provide for that?

Another question is - If I buy that house or condo in cash (off market for a quick close), and then can I turn around get a mortgage as a primary house, obviously keeping 20 to 30% equity in the house? 

Please help me address the above two questions. Appreciated. 

User Stats

2,727
Posts
816
Votes
Erik Estrada
Lender
  • Lender
816
Votes |
2,727
Posts
Erik Estrada
Lender
  • Lender
Replied Jan 4 2024, 09:42
Quote from @Pandu Chimata:

Hello team, I currently own a house and been living since 13 years. Its time to downsize as kids moved out of the house. 

If I buy another house/condo, smaller than I live currently , would that be considered as a primary home? How does the lender treats my next home as a primary home and what kind of documentation I need to provide for that?

Another question is - If I buy that house or condo in cash (off market for a quick close), and then can I turn around get a mortgage as a primary house, obviously keeping 20 to 30% equity in the house? 

Please help me address the above two questions. Appreciated. 


 Hey Pandu, 

As long as you can show an underwriter that you have a valid reason for downsizing, you should have no issues financing this under a conventional loan as long as your DTI allows for it.

Do you plan on renting out your current primary or keeping it as a second home? 

Fuente Funding Inc.  Logo

User Stats

28
Posts
18
Votes
Jason Potrzeba
  • Lender
  • Warwick Rhode Island
18
Votes |
28
Posts
Jason Potrzeba
  • Lender
  • Warwick Rhode Island
Replied Jan 4 2024, 09:49

Fannie Mae uses the term "Delayed Financing" to describe paying cash for a home and then applying for a mortgage to recapture some of those funds. You should have no issues if you apply and close within the first 6 months of making your new home purchase.

Here is info from Fannies sellers guide...
What is required for a delayed financing exception? (fanniemae.com)

BiggerPockets logo
BiggerPockets
|
Sponsored
Find an investor-friendly agent in your market TODAY Get matched with our network of trusted, local, investor friendly agents in under 2 minutes

User Stats

100
Posts
29
Votes
Pandu Chimata
29
Votes |
100
Posts
Pandu Chimata
Replied Jan 4 2024, 17:32
Quote from @Erik Estrada:
Quote from @Pandu Chimata:

Hello team, I currently own a house and been living since 13 years. Its time to downsize as kids moved out of the house. 

If I buy another house/condo, smaller than I live currently , would that be considered as a primary home? How does the lender treats my next home as a primary home and what kind of documentation I need to provide for that?

Another question is - If I buy that house or condo in cash (off market for a quick close), and then can I turn around get a mortgage as a primary house, obviously keeping 20 to 30% equity in the house? 

Please help me address the above two questions. Appreciated. 


 Hey Pandu, 

As long as you can show an underwriter that you have a valid reason for downsizing, you should have no issues financing this under a conventional loan as long as your DTI allows for it.

Do you plan on renting out your current primary or keeping it as a second home? 


 Thank you! I plan to rent the current home after some upgrades.

User Stats

100
Posts
29
Votes
Pandu Chimata
29
Votes |
100
Posts
Pandu Chimata
Replied Jan 4 2024, 17:33
Quote from @Jason Potrzeba:

Fannie Mae uses the term "Delayed Financing" to describe paying cash for a home and then applying for a mortgage to recapture some of those funds. You should have no issues if you apply and close within the first 6 months of making your new home purchase.

Here is info from Fannies sellers guide...
What is required for a delayed financing exception? (fanniemae.com)

Thank you! I assume there will be a difference of interest in taking the purchase loan vs "cash out refinance or delayed financing". Is that right?


User Stats

28
Posts
18
Votes
Jason Potrzeba
  • Lender
  • Warwick Rhode Island
18
Votes |
28
Posts
Jason Potrzeba
  • Lender
  • Warwick Rhode Island
Replied Jan 5 2024, 06:37

Yes, the cost and/or rate may have a slight adjustment because it isn't a purchase mortgage.

User Stats

2,727
Posts
816
Votes
Erik Estrada
Lender
  • Lender
816
Votes |
2,727
Posts
Erik Estrada
Lender
  • Lender
Replied Jan 5 2024, 11:40
Quote from @Pandu Chimata:
Quote from @Erik Estrada:
Quote from @Pandu Chimata:

Hello team, I currently own a house and been living since 13 years. Its time to downsize as kids moved out of the house. 

If I buy another house/condo, smaller than I live currently , would that be considered as a primary home? How does the lender treats my next home as a primary home and what kind of documentation I need to provide for that?

Another question is - If I buy that house or condo in cash (off market for a quick close), and then can I turn around get a mortgage as a primary house, obviously keeping 20 to 30% equity in the house? 

Please help me address the above two questions. Appreciated. 


 Hey Pandu, 

As long as you can show an underwriter that you have a valid reason for downsizing, you should have no issues financing this under a conventional loan as long as your DTI allows for it.

Do you plan on renting out your current primary or keeping it as a second home? 


 Thank you! I plan to rent the current home after some upgrades.


 Got it. What usually helps is having the property leased out already to show you aren't going to live there anymore. But a strong LOE should suffice. 

Fuente Funding Inc.  Logo

User Stats

336
Posts
112
Votes
Alex Hunt
Lender
  • Lender
112
Votes |
336
Posts
Alex Hunt
Lender
  • Lender
Replied Jan 10 2024, 08:49

Will you sell or rent your current home? Depending on the market a LTR or STR maybe a good option for long term gains vs short term gains on a sale. There are many options here

Yes the new home can/will be used as your new primary, allowing you to get a Invesment cashout refinance on the "old" primary if you wish.

If you buy a new primary in cash, yes you can get a 80% refinance on that cash price.

Would be happy to connect more on this!

User Stats

950
Posts
256
Votes
Jared Rine
Lender
  • Lender
  • Sacramento, CA
256
Votes |
950
Posts
Jared Rine
Lender
  • Lender
  • Sacramento, CA
Replied Jan 16 2024, 16:50

@Pandu Chimata...seems like you got some good answers but I'm going to add my $0.02, as an active mortgage broker in CA. Yes, smaller property should be treated as primary because your story makes sense - u/w'er will likely want a letter of explanation, nothing more. If you do buy in cash, yes you still should be able to turn around and refinance. If you're turning your new house into a rental, and you need income to offset the mortgage and you don't have a lease yet, the lender will need to get a 1007/rent schedule for the house you're leaving/old primary so you can use 75% of that number to use as income/offset the PITIA, so it doesn't hit your DTI as hard. Hope that helps, even if you've found what you're looking for already.

  • Lender California (#01915324) and California (#893462)

United Lending Partners Logo