You typically cannot use the equity in one property, even if it is owned free and clear, to meet the reserve requirements for the mortgage on an investment property. Lenders typically require that borrowers use liquid assets such as funds in checking, savings and brokerage accounts or holdings in stocks, bonds, mutual funds, CDs, money market funds and trust accounts as sources of reserve funds. We provide a comprehensive overview of the reserve requirement for a mortgage on FREEandCLEAR. You may be able to find a lender that uses more flexible qualification guidelines and allows you to use the equity in your primary residence as reserves but I think this is highly unlikely.
We always recommend that you contact multiple lenders to understand how they would handle your unique situation. You can compare non-owner occupied lenders in your area by clicking INTEREST RATES We advise you to contact at least four lenders as qualification guidelines vary. Plus, the interest rate for an investment property mortgage tends to be higher than the interest rate for a regular mortgage which makes shopping lenders even more important. You can also use our Personalized Mortgage Quote function to receive no obligation mortgage quotes from up to four lenders.
I want to pass along some more information that may be helpful when you apply for a non-owner occupied mortgage. We provide a comprehensive overview of non-owner occupied mortgages as well as a helpful explanation of how to get a mortgage on an investment property on FREEandCLEAR for you to review.