How to Rent Out Your Property and Use the Income to Qualify for Your Next Home

Making the leap from one home to the next can feel daunting, especially if you’re planning to keep your current property as a rental. But did you know that rental income from your existing home can actually help you qualify for your next home purchase? I’ve been there myself, and I’m here to guide you through the process.

When I decided to move from my home in the South Los Angeles County neighborhood of Compton to purchase a new home in Long Beach, I knew I wanted to keep my old property as an investment. It wasn’t just a smart financial move—it also allowed me to use the rental income to help me qualify for my new mortgage. Here’s how you can do the same.

Steps to Rent Out Your Home and Qualify for Your Next Home

1. Get Your Finances in Order

The first step is to evaluate your current financial situation. Lenders will review your income, debt-to-income (DTI) ratio, credit score, and overall financial health to determine your eligibility for a new mortgage. Rental income can offset some of the expenses from your current property, improving your DTI ratio.

To use the rental income, lenders typically require a signed lease agreement and proof that the home is ready for tenants. You’ll also need to have some savings on hand for your next home’s down payment and closing costs.

2. Prepare Your Property for Rent

Before listing your property for rent, make sure it’s in great shape. Clean, repair, and update anything that needs attention so your home is appealing to potential tenants. You’ll want to:

• Deep clean the property.

• Repaint or touch up walls.

• Fix any plumbing, electrical, or structural issues.

• Consider minor upgrades like new fixtures or appliances to attract quality tenants.

3. Hire a Property Manager

Managing a rental property can be time-consuming, especially if this is your first time renting out a home. A property manager can take care of tenant screening, rent collection, and maintenance requests, giving you peace of mind and ensuring you find reliable tenants quickly.

The property manager will also help you set a competitive rental price and draft a lease agreement that meets legal requirements.

4. Secure a Lease Agreement During Escrow

If you’re planning to use rental income to qualify for your next home purchase, you’ll need a signed lease agreement. It’s essential to coordinate your rental process with your new home’s escrow timeline. Work with your property manager to market the property and screen tenants while you’re in escrow for your new home.

Many lenders will consider up to 75% of the rental income when calculating your eligibility for the new mortgage. Be prepared to provide documentation such as:

• A fully executed lease agreement.

• Proof of security deposit.

• Rental market analysis, if requested.

5. Find Your Next Home

Once your rental property is leased and your finances are in order, it’s time to find your next home. Whether you’re looking to upsize, downsize, or move to a new area, I can help you navigate the buying process while keeping your financial goals in mind.

Why I Can Relate

When I rented out my home in South Los Angeles County, I had a lot of the same questions and concerns you might have now. Was it the right decision? Would the rental income truly help me qualify? How could I manage everything at once? Having gone through this process myself, I understand the emotional and financial stakes involved. That experience drives my passion for helping clients like you achieve their real estate goals.

Let’s Make It Happen

If you’re considering renting out your property and using the income to qualify for your next home, I’m here to guide you every step of the way. From preparing your property to finding your dream home, I’ll make the process seamless and stress-free.

Contact me today to start your journey. Together, we’ll turn your real estate goals into reality!