Welcome back to the Close More Deals podcast. I'm your host, Scott Tillingham. Today, I'm gonna be talking to you about another amazing program. I don't think there's a name for the program, but here's how it works. When you're buying your primary residence and you own a property that we're going to rent out, this program leverages that to qualify your borrower for much more money.
Scott Dillingham:So we're seeing this happen more and more and more because the market, it's cooling and homes are taking longer to sell. So we're seeing a lot of clients say, you know what, instead of selling, let's just rent it out, we'll buy a new one, right? Because they can, they can buy another one for just 5% down, providing it's your primary home. So how this program works is traditionally speaking, the banks and major lenders, when you do that and rent out your home, they'll use 50% of the rent. So let's just say your mortgage is 3,000 a month and you can also rent it for 3,000 a month, they're only gonna let us use 1,500, which creates a shortfall on paper, of course, but it creates a shortfall and it makes it harder to qualify for because then they look at it like that's a 1,500 a month debt.
Scott Dillingham:So how this special program works is there's a few lenders and there's not a lot, I'm gonna say five maybe, maybe six that I can think of that do this, is when you're buying a home to move into, they will allow us to use a rental worksheet. So this is much better because rental worksheets, you can use up to 100% of the rental income. So we put in the rent, we subtract the mortgage, couple of expenses, so instead of in this case, saying the loss was 1,500, maybe it might actually be 500 a month, when we factor in property taxes, all the other stuff that we have to in the calculator. So that's better, so that extra thousand a month in this example, can give your borrower much more purchasing power. Now, let me give you a real case study.
Scott Dillingham:So there was a bank and I'm not gonna call them out, but let's just say they have a blue logo. They approved a client for 250,000. Now when this client's market, they couldn't find anything. So obviously if you're hearing this and you're in GTA, it's laughable, But there's smaller communities where, you can still buy in this price range, but not quite the community where this client wanted to buy. So they were declined, they were going to rent.
Scott Dillingham:We ran the rental worksheet program and did their pre approval because their realtor suggested they reach out to us for a second opinion and we ran everything and we got them approved for $4.50. So now they actually can find something in their market. And I remember when I used to work at a bank, I remember hearing this sometimes when people doing this and I'm like, that broker, they must be doing something fraudulent, like they must, because how can you do that when we're at this amount and they're getting approved for that, but it's just tapping into special programs. So let us know, so if anybody, any of your clients are buying a primary home and they're going to rent out theirs, I promise you, our pre approvals will be way higher than if you just let them walk into the bank. This program is not available through the banks, they don't have it.
Scott Dillingham:So I promise you, you will get your client a much larger home. So obviously that means larger commissions for you, but it also means the client can find something that they want. In my instance, where I made that example, they couldn't find anything, right? It wasn't enough, they couldn't buy, so they were gonna rent and now they can buy. So anyways, I hope this adds a lot of value to you.
Scott Dillingham:If it does share it with your realtor friends, have them like and follow the show, it means the world to us. We just wanna help realtors across Canada close more deals. Thank you so much and we'll see you next week.