Rent current and but a new one?

Question

I purchased a home on my own 2 1/2 years ago on a 30 year FHA %3.375 rate. My principal balance right now is about 187K. I recently got married and we will be coming into some inheritance within a few months. We have talked about renting our current home and buying a new home. I have heard that paying off your rental is not necessarily the best choice because of the deductions it allows for, but given the type of loan this house is mortgaged with, is it even possible to buy another home together and start renting this one out when I have a FHA loan on this one? Would I have to refinance it or pay it off before renting it?

Brittany Minocchi · Answer

Yes, it's possible. You've lived in the property for at least a year which is the expectation for FHA loans. Some people will tell you you can't get another FHA loan, but there are some exceptions to that rule. You could also get conventional financing on the next one. No need to refinance your current loan even if you decide to rent it out.

Gaetano Ciambriello · Answer

I have helped clients in your exact situation in the last few weeks.

You do not have to refinance that loan to purchase another home.

In fact, you can purchase a new single-family home with 5% down and turn your current home into a rental.

You can even use the rental income you will get from your current home to help you qualify on the purchase of the new one!

Nathan Gesner · Answer

Most loans require you occupy for a year or two before you can rent the home. I suspect you've already met that requirement. You can (a) read your contract with the lender, or (b) call the lender and ask them directly.

Rent current and but a new one?

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