Can you get a new mortgage to buy a home if you are already on another mortgage?

By Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience

Edited by Michael Jensen, Mortgage and Finance Guru

Updated October 20, 2020

The short answer to your question is that you can qualify for a new mortgage even though you are already on another mortgage but the process is more challenging because you need to demonstrate that you can afford two loans instead of one.

Simply put, as long as you remain on a mortgage note, you are responsible for the monthly loan payment as well as property tax, homeowners insurance and other applicable housing costs, even if you no longer live in the property.  For example, in your specific case, if you apply for a new mortgage the payment for your current mortgage is included in your debt-to-income ratio along with the monthly housing expense for your new home plus your personal debt expenses such as credit cards and car, personal and student loans plus any alimony or child support payments you are responsible for.

With a debt-to-income ratio, the higher your monthly debt expense, the lower the mortgage amount you can afford and vice versa.  So including an extra loan payment in your debt-to-income ratio can significantly reduce the mortgage you qualify for.

This guideline applies regardless of if you personally make the mortgage payment on the other property.  So even if someone else pays the monthly payment, property tax and insurance because you do do not live in the home, as long as you are listed on the mortgage note, you are legally obligated for the loan so lenders factor it in to your loan application when you apply for another mortgage.  This is not to say that you cannot qualify for a new loan, but you need to make enough money to afford both mortgages. 

Use ourMORTGAGE QUALIFICATION CALCULATORto determine the mortgage you can afford

Usually, the only way to exclude a mortgage payment from a loan application is to refinance the mortgage and remove your name from the note.  This process requires the agreement and cooperation of any other person listed on the mortgage.

Additionally, the person(s) that remains on the note after the refinance must qualify for the new mortgage solely based on their monthly income, debt and credit score.  If they cannot qualify for the mortgage on their own, the lender will not approve the refinance.

The good news is that if you are able to refinance and remove yourself from the note, the monthly payment for that loan is no longer factored into your debt-to-income ratio when you apply for your own mortgage, which typically makes it much easier to qualify.  In this scenario, you only need earn enough income to afford one mortgage instead of two.

The table below shows mortgage rates and fees for leading lenders in your area.  We recommend that you contact multiple lenders to confirm their qualification guidelines for applicants with multiple mortgages.  Shopping lenders is also the best way to save money on your mortgage.

Sources

"B3-6-02, Debt-to-Income Ratios."  Selling Guide: Fannie Mae Single Family.  Fannie Mae, February 5 2020.  Web.

"B2-2-04, Guarantors, Co-Signers, or Non-Occupant Borrowers on the Subject Transaction."  Selling Guide: Fannie Mae Single Family.  Fannie Mae, June 5 2018.  Web.