Can seller qualify for new mortgage when they have a tenant buyer?

2 Replies

What happens to a seller what they do a contract for deed or some kind of owner financing? The buyer is making payments on the underlying mortgage. How is the seller to qualify now for a new mortgage or can they?

The seller's income from the installment sale they did will count towards their income for requal purposes. Eventually.  My guess is after the 1st year when they report in on their taxes.  To a lot of banks, if it hasn't yet hit a tax return, it hasn't happened.  The best candidates for seller financing I have found are those that don't need to requal right away or those that still can in spite of keeping the current mortgage.  

As a side note, a Contract for Deed or Land Contract is a risky way to buy property.  Good for the seller, though.  Find a method that gives you title to the property day one.  Good luck @Peter Mark !

It does depend.

Good points by @Steve Vaughan

The seller has income coming in on the seller financed sale and debt service to pay, which balanced out.

It is on the 1003 mortg app that the seller fills out to qualify for the new mortgage.

On a sub2 sale, the seller needs to wait 24 months to qualify.