What a roller coaster we have been on the past few months!
Back in October 2008, we were pre-qualified to purchase a new home and keep our current home as a rental. Then, the market crashed and the requirement to have 30% equity in the rental to use the rental income to qualify for the new mortgage went into effect. Considering what neighboring values have done to our value, that was not possible.
Now we have learned of a very inexpensive home that needs rehab work. In fact, only cash and rehab financing are allowed because the previous owner stole the entire kitchen (yes, the ENTIRE kitchen) and interior doors.
The home is relatively new, built in 2006 in a very nice area. It was originally sold for $220,000 and is now on the market for $110,000. We estimate it needs about $15,000 worth of rehab work, maybe $20,000.
We are investigating the FHA 203K loan and wonder if there are any regulations with the FHA 203K that would prevent us from keeping our current home as a rental *if* we could qualify for both mortgages outright, irregardless of rental income derived from the property? We would, of course, rent it out but if we could qualify renter or not, does FHA have an issue with that at all? Does it make it harder to qualify for the FHA 203K?
Thanks in advance for any help or insight!
