Basically I had a few questions about 2nd mortgages before I initiated the whole process of getting ready to apply for one. I have a 1 year mortgage paid 170,000 put 35,000 down I have a 7/1 interest only on the 135,000 and payments are $810 which includes taxes & insurance. The house will appraise for $220,000. My fiance is renting an apt and we looked @ townhomes in the area for about 175,000 I have 25,000 in stocks, savings, checking if we could qualify she has 2 friends that already pay $400 in rent and that is what she is currently paying. I am only making just above 30,000 a year I have about 4,000 in debt and a truck payment balance of $15,000 I will be selling the truck for between 14,000 and 15,000. Will rent suffice as income and if so who would use this as a qualifier.

Thank you

Trying to read between the lines a bit.....are you looking to obtain an equity line of credit on your current residence or refinance your first with cash out to use as a down payment? If so, I would suggest a 10% or 20% down payment.....Depending on your credit, you could very well qualify for 100% financing on the new purchase, but your rate will be more attractive (and the payments lower) with even as little as 5% down. You have plenty of equity in your primary residence, and I would imagine you'd want to refinance to a fixed rate eventually anyway. Why not pull out 10 or 20K to put down on the new property? I would submit the application with $800/mo as rental income on the property (as long as you can get a lease agreement you should have no problem using the income from it)...but make sure you don't attempt to sign two seperate leases for $400 each...with the property being one unit, as opposed to a duplex or something of the sort, most residential lenders would have a problem with two seperate leases. The only problem I could see them is the issue of whether or not the property will support the debt. Even at 20% down, the balance of $140,000 (very rough figures of 6% for 30 yrs), the Principal and Interest Payment is over $800. I'm assuming your fiancee would not be paying rent THERE, and living with you....but if you could rent the property with 3 people paying $400/mo each the property would then be cash-flow positive. There are many ways this deal could be structured. Call me on my cell phone if you'd like me to go over some of your options with you. Good Luck!