If you buy your next Lumpkin County home before the old one sells, you may own two homes for a while. The big question is not whether you can make both payments. It is whether your lender will count both payments when it decides how much you can borrow.
Here is how that usually works on a conventional loan, and what to ask.
The rule on a home under contract
Fannie Mae’s rules say that if your current home is under contract but will not close before the new loan, the lender counts both housing payments unless it has the signed sales contract and confirmation that the buyer’s financing contingencies are cleared.
So there are three states your old home can be in:
- Not under contract. Plan on the lender counting both payments.
- Under contract, buyer’s financing contingencies not cleared. Still plan on both payments.
- Under contract, contingencies cleared, paperwork in the file. The lender may be able to leave the old payment out.
Lenders can add their own rules on top, so treat this as the starting point and not the final word.
Keeping the old home as a rental
Some people decide not to sell at all. If you keep the old home as a rental, Fannie Mae lets a lender count 75 percent of its market rent toward qualifying, from an appraisal rather than a lease, and asks for six months of reserves from borrowers new to being landlords.
Here is the arithmetic with an example number. If an appraiser put market rent at $2,000 a month, 75 percent of that is $1,500. That $1,500 is what the lender works with, not the full rent. Your own figure comes from your appraisal.
Ask your lender what “six months of reserves” means in dollars for you, and where the money has to sit.
What a HELOC is
The CFPB describes a HELOC as working much like a credit card, except that you borrow against your home’s equity, and notes that most have adjustable rates.
The CFPB also warns that, depending on the agreement, you may have to repay the whole balance at once when the draw period ends.
People sometimes open a HELOC on the old home before listing, then use it for the down payment on the new one. If you do, remember:
- Ask your lender whether it will open one on a home that is already listed. Plan the timing before you list.
- The HELOC payment is one more payment the new lender may count.
- Ask your closing attorney how it will be paid off from your sale proceeds.
Bridge loans, in general terms
A bridge loan is a short-term loan meant to carry you from one home to the next, often secured by the home you are selling. Terms vary a lot from lender to lender, and they tend to be built for a short stretch.
If a lender offers you one, ask for the rate, every fee, the term, what happens if your home has not sold when it ends, and whether your new lender will count its payment. Compare that in writing against a HELOC and against simply selling first.
The intangible tax on the new loan
Georgia charges an intangible recording tax on a new long-term mortgage note: $1.50 for each $500 of the loan, up to $25,000 per note.
With an example loan of $300,000: $300,000 ÷ $500 = 600, and 600 × $1.50 = $900. Your closing attorney will show the real figure on your settlement statement.
Get the answer in writing
Before you make an offer on the new home, ask your lender to put these in writing:
- Do I qualify with both payments counted?
- If not, what do you need from my sale to stop counting the old one, and by when?
- If I keep the old home as a rental, what rent figure and reserves would you use?
- Will you count a HELOC or bridge loan payment, and how?
A spoken “you should be fine” is not an approval. A written answer is something you can plan around.
Where to go next
Compare the two gap-funding tools side by side on bridge loan vs HELOC, and see what your sale might leave you with on the net proceeds calculator.
Written by the Dahlonega Buy & Sell Editorial Team. AI tools help us draft; people check every fact before it publishes.
