25% equity in home to keep house?

Hello, I am new to investing and purchasing a duplex. I currently have a small single family which I would move out of and into one side of the new duplex. I want to keep the single family and rent it out, but my mortgage broker says that I need to have 25% equity in any property to keep it if I can’t support the mortgage with my income. Is this true? I live in NY state. Thanks

Not sure about NY. However, in Missouri, that is not an issue. I’ve never heard of a mortgage broker telling anyone how much equity they need in their current primary residence before they can rent it out. The way I see it is that it’s your house, you can do what you wish to it and no one can dictate if you wish to rent it out or not.

Yet, you will need to show how you will/could support the payments if the property is not rented.

The mortgage broker is correct. Fannie/Freddie and FHA all have guidelines in place regarding converting a current primary residence into a rental and the 25% is correct for conventional Loans and 30% for FHA plus you will have to have 6 months reserves for the property as well.

The reason for this is because so many people were buying new homes at drastically reduced prices (due to the drop in values and foreclosures) and walking away from their current loans.