Board Topic: Purchasing a condo for rental purposes on the Gulf coast of Alabama
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Purchasing a condo for rental purposes

Posted by: Kristn Click Oct 3 2004, 02:48 PM
I want to purchace a condo for rental purposes on the Gulf coast of Alabama. We have vactioned their numberous times ourselves. We would us the condo 2 0r 3 weeks out of the year - maybe 4. Where do I go to get the loan I need and how do I know how much I can afford?

Posted by: loanuniverse Oct 3 2004, 09:58 PM
I am not a residential lender, but I think that the easiest way would be to use your current income to qualify.

This would be looked at as a “second home” or “vacation home” loan. This means that some variation of the 28% / 36% rule will come into play. In other words, the debt service related to housing should not exceed 28% of your gross monthly income, and total debt service should not exceed 36% of your gross monthly income.

This is only going to work if you have enough income to support your current mortgage and the one that you will be taking on to finance the purchase. There might be a possibility that the rental income can also be used, but it would be difficult to quantify without history, and in my opinion it would be discounted by the lender.

You need to talk to a lender in the area where you are looking for property. Next time you are there drive to a bank and sit down with a loan officer.

Good luck.

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