Asking this question for dad about how to qualify for a home loan.

[karenkc]

So this is probably a dumb question, so please excuse me if it is. He wants to buy another house before he sells his current one. Since they go by your income he wouldn't be qualified for the loan. (He would have the down payment that is required). However, he would qualify if they considered that his current house will almost pay entirely for his next house. Do some places consider that? (I think he should know this. O well. I've never owned anything or took out a loan, so I have no idea.) Thanks.

[Seeker]

You can legally make one home contigent on the sale of another, but IMO most sellers are not willing to do that (especially these days when many houses do not easily sell quickly).

Another option would be for him to rent the cheapest place he can find, while moving out, fixing and selling the house until he has that down payment for the new house.

This is not an unusal question; just one not asked nowdays because a lot of people are underwater in their mortgages.

[karenkc]

O. He wanted to rent while he looked and I talked him out of it. I'll tell him what you said.

[cypher1]

Another option would be for him to rent the cheapest place he can find, while moving out, fixing and selling the house until he has that down payment for the new house.

More people I know recently have been doing that. One couple (with kids) had a new house custom built. So for 6-7 months they rented, and moved everything to mini storage. At first it sounded like more of a hassle for the work, coordination and fees/rent, but it's better than having dual mortgages indefinitely till the 1st home sells.

[MonkeyMama]

Having owned 2 homes in that situation, personally, I would recommend selling first. Move into cheap apartment, sell, then buy new home.

That said, we qualified for 2 home loans easily, when we considered the potential rent from first home. Of course, rents were VERY high in that city - rent on home 1 may have covered both mortgages. That was 2001 - things have gotten so much looser, and then tightened up, since. I really wouldn't recommend this route, regardless. The market was HOT when we bought our second home, but then 9/11 hit and we couldn't sell our first home for a few months. WE hadn't listed it prior because we expected to take 5 minutes to sell it (literally). A tough lesson for us to learn. We eventually sold it in 5 minutes time, just $100k less and a few months later than expected.