Hi Leterps. I'll add one thing here in an effort to round out the responses. Your Coop house rules may limit the amount of time you can sublet the apartment. You need to check into that. They may allow no more than 2 years of sublet and require you to pay a precentage of your yearly rent into the reserve fund. I'll allow the mortgage pros to deal with that part of the question. Good luck.

Good morning Leterps,

As you see from the responses by other mortgage professionals, a scenario like the one you propose requires more investigation than a simple flat response. Shane is correct with his assertion on the 25% equity guideline, but Annette is also correct by indicating you may only need to explain your move and might not need the 25% equity. Then again, they could both be wrong. You must sit down with a LOCAL Mortgage Banker---someone familiar with the guidelines and the NY Metro region---to prequalify on all aspects of your loan request. The guidelines are open to the interpretation of the Underwriter approving the loan. The scenario has to make sense in order to provide you with the proper response to your query.

Trevor Curran NMLS #40140

Annette, I was talking about the need to have 25% equity in your home if you are moving within the same commuting area and are trying to use rental income from your primary residence that you would be converting to a rental property - that is a standard FHA guideline. Fannie Mae & Freddie Mac require the 30% equity - doesn't matter if you are moving 3 miles or 300 miles.

I wasn't talking about the believability of the new home being owned occupied or not.

Leterps,
After checking with your coop about renting and how long they will allow you to rent, you will need to know what the coop requires in income and DTI from the renter. On the rent you receive, we will take 75% of the amount and minus it from PITI and maintence. This will only be done if you have a lease and security deposited. Check with a realtor that is familiar with coops in your area to see what rents are. You will need a realtor to get a renter through Board approval.
Shane is wrong about the commuting distances. If you bought a house in the Gardens, you would just need a letter explaining why you upgraded. For example I own a studio but got married and plan on having a family.

Hi Leterps, if you are currently living in your Coop then it depends on how much equity you have in your home as well as where you are buying your new house. If your Coop is in Queens and your new house will be in Cedarhurst, that is only 11 miles and is within commuting distance, so you would need to have at least 25% equity in your Coop in order to use the rental income to help you qualify. The 25% equity is a requirement for FHA financing, but if you are choosing to use conforming (Fannie Mae/Freddie Mac) financing then you would need 30% equity. If you were relocating to an area not within reasonable commuting distance, then FHA doesn't require you to have any equity in the primary home you are converting to a rental property.

Hi Leterps, if the Coop mgnt allows you to rent (they may charge you a yearly fee-some equal to 2-3 months of maintenance) of course it is counted as part of your DTI-bank/broker will most likely only take 70%-80% of your rental income -not total per year- in case the apartment is empty for 2-3 months....check with the mortgage company and then figure what your options will be..and what you would qualify for. Terry K 718-614-3167 or email tkorahais@elliman.com

Does the co-op allow renting....if you are an agent as stated under your name, and are looking for a mortgage, for accurate answers as they apply to you, consult with a loan officer......