Second home loan from Navy Federal FCU

[Tom Albares]

My wife and I currently own two short term rentals in Tucson, AZ. Both were bought as investment properties using conventional mortgages and 20% down. Navy Federal, who I bank with, has a second home mortgage with as little as 5% down and no PMI that allows rental of the property when not being occupied by the owner. But all income from the rental is taxable (normal), and income from the property cannot be used for qualifying for the mortgage or subsequent mortgages. We'd like to expand our portfolio.

Does this look a viable option to acquiring another property?  Thanks in advance

[Andrew Postell]

@Tom Albares I think I'm tracking with what you are asking...but if I'm off let me know.

Whenever we buy another rental property, we should always work with a lender that will use the rental income of that property to help me qualify.  We are working under the assumption that these are rental properties that are used in a traditional sense - meaning, 12 months leases.  Short Term Rentals (STRs), owner financing, etc. are handled differently.  So as long as they are rented, I should get credit for that income. Otherwise, I will eventually hit a wall and NOT be able to qualify for anything with that lender.  Since we only buy properties that cash flow, I should look BETTER with each property I purchase.  At least, that's how it should work in concept.

So for a 2nd property, you cannot use income from that home to help you qualify....since you are occupying it part of the year.  If you are occupying it part of the year, then you cannot rent it out for 12 months.  Does that make sense how I am saying all of this?  Hit me back if you were talking about something else.  Here to help.  Thanks!