How to buy a home when you already own one

1056. Should you buy your next home before selling your current one, or is it safer to sell first? How does an existing mortgage impact your ability to qualify for a new loan, and where should your down payment actually come from? Host Laura Adams answers a listener’s questions about navigating the tricky logistics of moving and whether to convert her current house into a rental property.

Key Takeaways

• You can source your down payment from savings, home sale proceeds, a pre-arranged home equity line of credit (HELOC), or a short-term bridge loan.
• Carrying two mortgages at once counts toward a lender’s debt-to-income (DTI) ratio for underwriting.
• If you convert your primary home into a rental property, most lenders allow you to use 75% of rental income (backed by a signed lease) to offset your existing mortgage when qualifying for a new loan.
• A leaseback agreement allows you to sell your home, receive cash proceeds on closing day, and remain in the home as a tenant for up to 60 days.
• Holding two properties simultaneously usually requires higher credit scores and cash reserves.
• Consult a mortgage expert to calculate your exact borrowing limits under different scenarios before placing offers or listing your property on the market.

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