Hi friends I'm Laura Adams and you're listening to the Money Girl

podcast. A reader named Aaron asks, I live in a town home and want to buy a bigger house in a

better neighborhood. But I'd like to keep my town home as a rental property.

What are the rules for getting a new mortgage when you rent out your house and buy another one?

Becoming a landlord certainly isn't for everyone.

However, having tenants who pay enough rent to cover your mortgage and give you extra monthly income

can be a fantastic investment for now and when you retire.

Keeping your old home as an investment property is one of the easiest ways to become a

landlord.

In fact, that's how I got my start as a real estate investor.

All you have to do is move out and stick a for-rent sign in the yard.

Getting a mortgage for a second home is just like the process you went through to buy your first home.

Approval depends on your income, savings, down payment, credit rating, and debt to income ratios.

Buying a second home that you plan to live in doesn't require you to pay a higher down payment

or have a certain amount of equity in your existing home. You simply have to prove that you can

afford two mortgages.

Not only is it easier to rent your house and buy another one, but it's less expensive

than getting a loan for an investment property.

A mortgage for a non-owner occupied property requires a larger down payment like 20 or 30 percent.

And always comes with a higher interest rate, then a loan for a house that you plan to live in.

Before you start shopping for a second home, here are six important tips to make sure that you're ready to own a rental property.

Tip number one, review your existing mortgage.

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