Assuming my sister's mortgage

11 Replies

Hi everyone,

My sister has great financing on her home in the Columbus, OH area (Dublin) and her payment piti is $900.  She could achieve $1,500 in rent. She wants to move on and get a bigger better place but knows she won't qualify for as much house right away carrying the payments on this place. Is there a way for me to assume her mortgage and take that payment away so her lending institution won't use it in their calculations for her debt to income?  Thanks!

if the loan is assumable then yes. Typically VA loans are assumable. Check her loan docs. Otherwise that would be buying it subject to and it would still be in her credit

Thanks @Richelle Thomas. Could she refi to a VA loan (she's not a veteran) and then we could make something happen? 


No, only veterans get VA loans. If it's FHA, it's assumable with you of course going through a qualification process, just like for a new loan.

Somebody is going to have the loan on their records (and included in their debt to income ratio), either you or her.  You could have her "rent" it to you for $900/month.  After a year of rent history the bank should include that as income towards her next loan.  

Originally posted by @John Horner:

Somebody is going to have the loan on their records (and included in their debt to income ratio), either you or her.  You could have her "rent" it to you for $900/month.  After a year of rent history the bank should include that as income towards her next loan.  

I believe John has it right, but I believe some banks want an even longer rental history. By history they just don't mean payments, but a history of managing the rental property. In other words, if you paid your sister a year's worth of rent today, it will still be a year before the bank will count that towards her income when figuring DTI.

I see. This is all very good information. The FHA concept is interesting. I already have an FHA so I wonder if I can assume a second. Does anyone know?

Also my dad is a vet.  Any chance he could refinance to his name and I can assume from him?

I am ok with this showing up on my debt to income.

Am I pushing too hard to make a deal work?!  My husband always criticizes me for that...

Well then maybe just buy it.  Why the focus on someone else refinancing it, then you assuming?

@Wayne Brooks  The focus on someone else refinancing it has to do with a better interest rate as well as less money down and avoiding realtor fees.  As an investor I would be facing 20% down and a higher rate which would start to affect the cash flow and it would no longer make it a deal.

If they refi to an owner occupied loan, you can't assume as an investor.  The rate will change to current rates with a refi.

That's what I needed to know!  I was hoping to take advantage for owner occupied rates as an investor...I was looking for that work around.  The only way I have learned how to do that is to live in the property first and then keep the financing in place when moving on to the next house.  Do you agree everyone or does someone know something differently? I think @Richelle Thomas, you might have a different experience assuming VA loans?

@Tracey Marzich I think I would pursue the option of your dad using his VA status to get the house. What are the minimum occupancy reqs for VA? Could your dad move into the house for a year? Someone will have a loan on their name, you just don't want it to be you!

Also, @Barbara Riley mentioned the VA vendee loan program the other day. I liked it up but I'm not sure it's still available. Essentially it allows investors to get Va loans wether or not they are veterans themselves. If you find out more about it let me know.

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