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FHA: NO MORE ‘BUY AND BAIL’

The FHA will no longer allow homebuyers to rent out their current home and use the expected rental income as part of the basis for obtaining a new mortgage to buy another home. Most buyers must now show that they can cover both mortgages unless they have 25-percent equity or provide proof of a job relocation and arrange a one-year lease on their current home. The FHA hopes the new rule – implemented as a temporary measure on Sept. 19 – will prevent buyers from purchasing a less expensive home and abandoning their current mortgage.

Source:
Inman News (09/24/08)
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  Related Topics: Mortgages
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