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I am looking to buy a second house which is about $800K (A 1600-sqft, 3b3b condo in the suburb). I intend to live in this house as well as renting out two bedrooms for roughly $1200 per month each. I am interested to know strategies to qualify for a loan to get the house (i.e. maximize the money I can borrow from the bank)

My current situation is,

  • I have $130,000 in cash
  • My first house is worth about 750K but I have a outstanding mortgage balance of 360K
  • The house has $4300/monthly rental income but I pay $2400 per month for mortgage, HOA and property tax combined
  • My salary is $140,000, with $20,000 yearly bonus and $50,000 yearly stocks. However I only joined this company for about one year
  • I do not have other debts such as auto loan or student loan

I heard, usually I can get a loan which equals 4 times of my salary. That makes it 560K and plus my savings which is only 690K and 110K shy of the house listing price. I am looking at options such as using first house as collateral or cash out refinance or get home equity loan, but I am not sure what is the best strategy here.

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    Which country are you in? How long have you had rental income at your current residence?
    – Hart CO
    Commented Mar 31, 2018 at 2:45

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Typically, the amount the bank is willing to borrow you is the smaller problem; you should worry about the amount you are able to pay off.
Depending on the current mortgage rates, the amount you are able to finance is limited by your monthly secured income, and the duration of the mortgage.

This is also the calculation the bank makes, different countries have different rules, but a rule of thumb is you cannot/should not pay more than 30% of your monthly net in the mortgage rate.

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