Looking to buy 2 SF Homes using conventional loans. Have Questions

Buying & Selling Real Estate
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Looking to buy 2 SF Homes using conventional loans. Have Questions

Calvin Ly
Houston, TX · Member since 2012 · 30 posts · 2 votes

Hi Guys and Gals. Hoping you can point me in the right direction-many questions. I am wanting to buy 2 single family homes using a conventional loan or 2. The two homes will be in different states. My plan is to hold the houses for 2-3yrs. Unsure if I will rent them out at this point. When applying for a loan can I apply as a non investment since I will be living in them as my original intend? Can I get 2 conventional loans? Here is a little financial background: 100K cash, 50K salary, 750+ credit score, current home 220K paid off, and about 35K long term debts-student loan and 5yr car note. I am not going to sell the house I currently own since my parents current live there with me. One of the houses to be purchased will be in the same city as the current home I own. Basically, I am at the beginning to set up my long term real estate buys starting with these two homes. I would like to add more as I go. Also, what conventional mortgage companies are decent? I started my application with PenFed because of great rates but after reading the reviews I got deterred. Sorry about my post being everywhere probably because it's been a long day. Hope this all makes sense. 

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  • Dominic Leung
    Real Estate Investor · Alamo, CA · Member since 2013 · 6 posts · 1 vote
    12y

    If your current residence is not under your name, you can buy your next property as your primary residence.  Your 2nd property can be your vacation home.  Debt ratio is very important to lenders so you got to figure out you can afford - mortgage payment, insurance & property taxes.  Based on your income, i guess it would be difficult to buy a 2nd home and not renting it out.  Lender wants to see cash-flow to offset your debt ratio.  

    Final advice, take it one  step at a time.  

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  • Lynn McGeein
    Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
    12y

    As far as the first one, I'd think you'd be fine as your current home is paid off as long as you qualify for the next one's payment debt-to-income wise. They'll include current home expenses like real estate taxes, utilities, etc., unless you can show that your parents pay those expenses for you (probably need proof like bank statements or rent checks for a few years, so if they help you out, make sure you can prove it). You may be able to go FHA, more expensive a loan product, I think, but much lower down payment required, and if they question you already owning the first one in the same town, you'd have the reasoning that you'd like to have your own primary residence apart from your parents. You might even look for a 1-4 unit and live in one, rent the others, as FHA allows that.

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  • Calvin Ly
    OP
    Houston, TX · Member since 2012 · 30 posts · 2 votes
    12y
    @Dominic Leung:
    Unfortunately, the house where my parents reside is under my name. That has been an issue with obtaining a mortgage in the past. For some strange reason I was told if the house wasn't paid off I had a better chance of being approved for another mortgage-I still don't get how, since this increases my debt. Good advice about one at a time, was getting ahead of myself there. 
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  • Calvin Ly
    OP
    Houston, TX · Member since 2012 · 30 posts · 2 votes
    12y
     @Lynn McGeein:

     I was originally looking for a duplex but they are hard to come by in New Orleans at my price point. Ideally I want a purchase price of no more that 150K per home.  I guess at this point I need to get a preapproval for a conventional mortgage. Anyone know of a decent company with great rates? 

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  • Shaun Weekes
    Loan Officer / Processor / Life & Health Agent · Rancho Cucamonga, CA · Member since 2014 · 1k+ posts · 757 votes
    12y

    Hello Calvin,

    Make sure you look to future in regards to your DTI ( debt to income ratio ) so that you don't get into trouble or problems qualifying for a loan when you're on number 8, 9 and 10.

    If your price point is 150K i would recommend that you make sure that the rent after a 25% deduction still covers the PITI ( Principal Interest Taxes and insurance ) because this will enable you to qualify for a mortgage based on your salary since the rental income is covering the rentals.

    When you do your taxes be careful not to write off too much income as that might hurt you in the future when it comes to qualifying for a loan.

    It's really important to make sure that the Loan officer that you use is on the same page as you and does the correct calculation to give you the best chance at getting approved everytime. 

    I hope this helps and have take care. 

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