Obtaining mortgage with possible lack of rental history...please help!

[krisj8486]

Here is my situation. We have been renting a house for 1 1/2 years and it was foreclosed one. The landlord failed to give us any type of notice. Yay for us. We worked out a deal and can stay in the house for a year max and able to leave at anytime with a 30 days notice. Since this has happened, we have re-looked at our finances and would like to purchase within 6 months to a year. We have been renters for 7 plus years with perfect rental history. We are thinking of moving in with a relative to allow us to save anywhere from $2500-$3000 a month. We will only be responsible for utilities. My question is this- when we go to buy, we will be asked to supply rental history. Will utilities be enough proof? Our current rent is $1200 a month, and since we plan to save a lot more than that, will the savings amount be enough to justify not paying actual rent? Any help with this would be appreciated. Thanks!

[mynameainttracy]

I don't know the answer, but in order to get myself prepared for this exact situation I have been getting copies of all my cancelled rent checks for the last 3 years I have been renting. It was a lot of work to go back through all my statements and track them down but I'll have them ready if needed.

[BrianB_The_Loan_Professor]

Welcome to the forum - rental history is not a requirement if you get an automated approval 

however some banks may still ask for it so what you need to do is show 12 months of rental checks for the place you live in now - a solid letter explaining how you were taking advantage of living with family to save and proof that you followed the plan - 

People get loans while living with family all of the time - 

Good Luck

Brian

[krisj8486]

That is some relief and thanks for your help!

[Sheisaking]

If this helps at all, I just purchased my first home and rented for 3 years but had lapse of rental history of about  2 years right before I purchased. That didn't hinder my purchase at all. 

[DanTheMan77]

We're in the same situation... living with family and only paying utilities. Here's what we did on the advice of my mortgage broker. Through my online banking, I set up an automatic transfer from my checking account to a dedicated savings account. On the first of each month, my bank automatically transfers $2000 (use an amount equal to what you anticipate your mortgage payment will be) from my checking to savings. My bank allows for a memo line on the automatic transfer, so I entered "Proof of Rent/Down Payment". This memo shows up on my chekcing account statement. Not only does this allow me to save for a down payment, it will show an underwriter that I am regularly "paying rent"... I'm just paying it to myself. As long as the funds remain in the savings account and aren't transferred back, this will be comparable to a rental history.

[krisj8486]

Great advice, will definitely get something like that set up. Thanks!

[DallasLoanGuy]

if you are living rent free... be prepared to show how you were able to save.... just in case.

i don't verify rent unless i do a manual underwrite. i havent had automated underwriting call for rent verif in forever.

[Peter1142]

But even for automated approvals isn't current rent = $0 a negative factor in the approval? It is on the standard loan application.

[BrianB_The_Loan_Professor]

Maybe a little but it isnt a deal killer with automated

a lot of people move in with family to save and are able to get through automated with no issue

It is more common that we get approvals than a refer or outright denial

even with no current rental history