Can I qualify for another mortgage of a new home if I own a home underwater by 50000?

We need a bigger house, and we would like to rent out our townhouse and get a bigger house. We still owe about 150000 on our townhouse. We have good credit scores over 720 and steady jobs. We both have worked at our jobs for over 10 years. We would like a home in the price range of about 250000-300000 in the area we live in. (Chicago suburbs) Is it possible? What steps should we take?

By | 2013-08-25T15:19:11+00:00 August 25th, 2013|Mortgages Home Loans Interest Rate|4 Comments

About the Author:


  1. acermill August 25, 2013 at 4:39 PM - Reply

    If your incomes are adequate to support the payment of both mortgages, yes, you can get another mortgage. Understand, however, that any lender will give you ‘income credit’ for rents received on your townhouse at a rate of about 70% of rent income. That approach is used in the event of a few months of vacancy in the townhouse.

    Thus, if your mortgage payment is $2000 a month, and you rent for $1500 a month, your incomes will need to satisfy $2000×12 = $24000 minus income credit of $1500x12x.70 ($12600). Thus, your incomes will need to satisfy whatever will be your new home’s mortgage payment, PLUS another $11,400 per year for the townhouse.

  2. the kid August 25, 2013 at 3:59 PM - Reply

    Being underwater doesnt’ matter so much as having the income to be able to pay both mortgages. Rental incoem will not be considered until you have two years of it steady.

  3. Landlord August 25, 2013 at 3:40 PM - Reply

    The underwater part does not matter.

    You need to have enough income to qualify to borrow 400,000 0 450,000 Your combined income needs to be 150k or more.

  4. Venita Peyton August 25, 2013 at 3:19 PM - Reply

    A lender will qualify you based on your ability to pay for two mortgages. It’s always helpful to have a leased tenant who promised to pay the rent on time, but, sometimes they don’t.

    Try for getting a firm, second loan. Do not accept a bridge loan. This would bind both houses together.

    Congrats on being employed. Its still not the best market for taking chances, because, a disability (even with short and long term coverage) can set you back. Or, the loss of one or both jobs.

Leave A Comment