Getting a second mortgage with a high debt to income ratio

Lenders are really cautious about the "Buy and Bail" clients of the past, which is when someone sees a nicer home they want to buy, so they say they are going to rent their current home and purchase the nicer place, only to let the first place get foreclosed once they obtain the loan on their new home... so for that reason, purchasing another home will sometimes throw red flags... That being said, your ratios would certainly have to be in line. Some lenders will allow the rental income from the first home to be included in your income to lower your ratios, but not every lender will do this.. Check with your mortgage broker and ask his advise... Also, the self employment income will not be a problem if you have had it for more than 2 years... WilliamAcres.com

Under the new "Buy and Bail" guidelines, you will have to qualify for both mortgages with no credit for rent. You will need six months reserves also. There are some nuances to purchasing a second home in the same area that should be addressed before submitting your file to an underwriter. I have done several loans such as this. Please contact me at 619.787,8212 if I can be of assistance.

Had to come back for another thought...you really do want to buy before you rent in this market. Because the underwriting is relatively restrictive, you do not want to put yourself in a temporary situation by renting your current residence with a "hope" that you could use rent to qualify for another purchase. This approach has the opportunity to provide lots of undue stress in your life. Definitely, keep the horse before the cart and get the new property first! Best of luck!