What percentage of equity in a rental must you have to qualify for another loan on a primary?
Is there a 'rule of thumb' for how much equity you must have in a potential rental property to qualify for a loan on a primary residence property? We're having trouble selling our townhouse, so we're considering turning it in to a rental. We do have some equity in the unit. If we try and rent it, is there a percentage of equity we would need to have in it in order to qualify for another loan on a primary residence??? Credit rating is good, about 690. by washington_apple32 from Snohomish, Washington. Jun 23rd 2011
Gianni Cerretani (mortgagegodfather)
#32 ranked lender in Georgia - 238 contributions
The answers below are correct but if you are trying to get a VA or FHA loan there is no requirement for equity vested. If you want to use rental income then 2 years history on tax returns will have to be documented.
Gregorio Denny (GVDenny)
#257 ranked lender in California - 380 contributions
Actually, the answer is zero. You are not required to have any equity in your property in order to qualify for a new primary residence, you are just required to have equity if you need to use the rental income in order to qualify for the new purchase. If you can afford both principal, interest, tax and insurance payments on both and you have adequate reserves, no equity is needed. FHA requires 25% equity to use the rental income and conventional requires 30%.
William Doom Vice President of Mortgage Lending (YourMortgagePlanner)
#11 ranked lender in Hawaii - 3 contributions
You will need 30% if it your current primary.
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