Home Purchase Mortgage Calculators
Mortgage Program Calculators
There are several points to keep in mind about what you want to do. First, most lenders require that you live in a property for three-to-six months for it to be considered an owner-occupied property. So when you buy the property you are currently living in you should plan on living in it for three-to-six month before you think about renting it out and buying another property. After you have fixed up that property and lived in it for a sufficient amount of time you need to rent it out for six-to-twelve months for that rental income to be considered when you apply for the mortgage on your new primary residence. In addition to providing the lease agreement, banks typically require that you verify six-to-twelve months of rental income from a property either by providing a Schedule E from your tax returns or monthly bank statements that verify lease payments. If you cannot verify rental income for the required period of time you will not get credit for that income when you apply for the mortgage on your primary property. If you own a rental property and want to buy another property for your primary residence you must earn sufficient income to demonstrate that you can afford the total monthly housing expense (mortgage, taxes and insurance) for both properties so the rental income is certainly beneficial and perhaps a necessity.
To summarize, buy your current residence and fix it up and live in it for three-to-six months. After three-to-six months, move out and rent that residence for six-to-twelve months before you apply for a mortgage on your new primary residence.
On your question about down payment, we provide a thorough discussion of what size down payment you need to make on FREEandCLEAR. It is important to highlight that the down payment required for a non-owner occupied (rental) property is typically higher than the down payment required for an owner occupied property so that is why it is important to live in your current residence for at least three-to-six months after you purchase it. We also provide a comprehensive discussion of non-owner occupied versus owner occupied mortgages on FREEandCLEAR.