Buyers Converting Their Principal Residence Into A Rental /Purchasing Another Home
A homebuyer who is moving out of his/her present principal residence but plans to rent the home out and use the rental income (future) to qualify for their new house got a nasty shock in late 2008 when Fannie, Freddie and HUD changed the rules . . .those rules demanded the home being converted into a rental had 25% (FHA) or 30% (CONV) equity . . .a tall order for many homeowners.
This basically “put the kibosh” on homeowners’ ability to purchase another home if they already had one.
Well, VA has never adopted this rule . ..and it’s a little –known fact that Veterans getting a VA Loan can use the proposed rental income from the home they’re vacating even if they’re upside down!
Certain other “common sense “ rules apply. . . such as having a good reason for the new purchase.