> ## Content Index > Fetch the complete content index at: https://www.mortgagemomradio.com/llms.txt > Use this file to discover other available public pages before exploring further. # Can't Find a Rental? You Can Probably Afford to Buy Instead - URL: https://www.mortgagemomradio.com/cant-find-a-rental-you-can-probably-afford-to-buy-instead/ - Published: 2023-05-10T21:00:00.000Z - Updated: 2026-09-04T20:59:23.000Z - Description: One condo, one hour of showings, 42 applications — from people with 750 credit scores and $50,000 in the bank, who paid $10,900 just to get the keys. Debbie and guest Mary do the math on what buying the same unit would have cost them. - Author: Deborah Marcoux - Tags: Podcast, Mortgage Mom Radio, #episode-backfill Mortgage Mom Radio • Live show from Wednesday, May 10, 2023 • 57 minutes • Hosted by Debbie Marcoux, NMLS #237926 • With guest Mary, notary and Orange County real estate agent Mary listed one two-bedroom condo for rent, opened it for exactly one hour, and took 42 applications. The applicants had 750-plus credit scores, $50,000 in the bank and documented income — and they were competing for the privilege of paying someone else's mortgage. Debbie brings her on to tell the story, then does the math nobody in that line had done: what it would have cost those same people to buy. ## Key takeaways - **The rental shortage is as bad as the for-sale shortage.** One listing on Facebook Marketplace drew over **1,500 views and 100 requests in a day**, and more than **3,500 views and 400 requests** by day three. A one-hour showing produced **10 applications on the spot and 32 more that night**. - **The people losing rental bidding wars can usually buy.** Mary's applicants had **750+ FICO scores, over $50,000 in the bank, stable jobs and little debt**. By her own estimate, at least **80%** of them could have qualified to purchase. - **Renting isn't cheap up front either.** The winning tenant handed over **$10,900** — first month, last month, security and pet deposit — for a **$3,000/month** rental. Several applicants offered a full year's rent in advance. - **Run the after-tax comparison, not the sticker comparison.** The same condo bought with 3.5% down at a 5.625% FHA rate penciled around **$4,800/month** all-in. Debbie's estimate of the effective cost after the property tax, mortgage interest and mortgage insurance deductions was closer to **$3,500** — and refinanced later at 4.5% without mortgage insurance, the same payment runs about **$3,527**. - **Closing costs are roughly 2% of the price** — about $10,000 on a $500,000 purchase. That is the same order of magnitude as the cash it takes to move into a rental. - **Down payment assistance exists in more states than people think,** including CalHFA in California, with income limits more lenient than most buyers assume. - **You do not need to buy the dream house first.** If Huntington Beach doesn't work, a condo further inland does. It's a stepping stone — and the tenant has no stability, no improvements they can make, and a 5% annual rent increase (in California) waiting at renewal. ## Chapters - 00:50Why today's show is about rentals - 05:30Listing it on the MLS — and then on Facebook Marketplace - 07:003,500 views, 400 requests, and a phone she had to silence - 09:00One hour of showings, 42 applications - 11:00$10,900 just to get the keys - 12:30The buy-versus-rent math on the same condo - 13:30What the tax deductions do to the real cost - 16:40Why getting fully qualified early decides who wins - 18:20If the area is too expensive, move the search, not the goal - 21:40Why the rental market got this tight - 25:40Renovation loans: FHA 203(k) and conventional options - 27:20Q&A: the hardest part is the down payment - 28:40Down payment assistance and the 2% closing cost rule - 41:20Why the landlord picks the strongest file — and lenders don't - 46:20Q&A: does inheriting a condo end first-time buyer status? - 54:20Wrap-up ## Questions answered on this show ### “If someone who has never owned a home inherits a condo and sells it, are they still a first-time buyer?” It depends on whether title actually moved to them, and the rule is the same in every state — these are Fannie Mae, Freddie Mac and FHA guidelines. The baseline: if you have not owned real property in the last three years, you're considered a first-time buyer. If the property was held in a family trust and the trust sold it, title never transferred into your name, so you never had home ownership — you'd still be a first-time buyer. If the trust deeded the condo to you and you became the owner of record, you are not; you own real property. But this matters less than people think. First-time buyer status is required for many down payment assistance programs. It is *not* required for a low down payment — 3%, 3.5% or 5% down are available whether or not you've owned before, and you can get an FHA loan even if you've bought a house before or still own one. Some assistance programs don't require first-timer status but do require that you not own property at closing — fine if you're selling the one you have, not fine if you're keeping it. ### “The hard part for someone like me is putting together a down payment. How do people actually do it?” Start by comparing it to what a rental costs to move into — the tenant in Mary's story needed $10,900\. What you really need is enough to cover closing costs, which run about **2% of the sales price**: roughly $10,000 on a $500,000 purchase, and sometimes less, and sometimes the seller can be negotiated into paying them. The down payment itself is where assistance programs come in. California has CalHFA, whose income limits are more lenient than most people assume, and there are down payment assistance programs available in other states as well — the listener asking was in Washington, and there were options there too. If you have the cash it takes to get into a rental, there is a very good chance we can get you into something to buy — possibly outside the exact area you had in mind. ### Find out what you'd actually qualify for Call [844-935-3634](tel:8449353634) (844-WE-LEND-4), [start an application](https://www.mortgagemomradio.com/apply/), or compare renting and buying with the [mortgage calculators](https://www.mortgagemomradio.com/tools/). Get the weekly rate rundown in the [newsletter](https://www.mortgagemomradio.com/newsletter/). Full transcript (lightly edited for clarity) *Auto-generated captions cleaned for readability. Sponsor messages, commercial breaks, and repeated housekeeping have been trimmed; licensing information appears at the bottom of this page. The guest is identified on air by first name only.* ### Why we're talking about rentals **Debbie:** Welcome to Mortgage Mom Radio. I'm Debbie Marcoux, the Mortgage Mom. Today we're talking rentals. A lot of clients have put home purchases on hold — which I don't agree with, but it's happening — and they're out exploring rentals instead. So I've brought on a good friend of mine, Mary. She's a notary who specializes in loan documents, she's a real estate agent, she owns rentals, and she has just bought a new investment property. She told me what happened when she went to rent it out, and I wanted you to hear it from the person it happened to. **Mary:** I'd been sitting on the sidelines like everybody else, waiting for the crash everyone kept saying was coming. Prices weren't dropping — in Orange County they were only going up. I'd never been a landlord in California; I had properties in Florida, and Florida is a completely different beast. We wanted something close to home this time, and a property came along a block from our house. We finally pulled the trigger at the end of March. Even then I didn't feel like it was the right time — a two-bedroom, one-and-a-half bath, 1,100 square feet, paying that much for it. But you can't make that kind of money in the bank, so we did it. ### One hour of showings, 42 applications **Mary:** I didn't know where to start. In Florida you list on the MLS, so I put it on the MLS to see what feedback I'd get, and maybe seven to ten agents called and set appointments three, four, five days out. Then my sister, who has rentals, asked if I'd put it on Facebook Marketplace. I don't even do Facebook. She walked me through it, and within a minute I already had five responses. I asked her, is this normal? She said yes — that's why I told you. After one day I had over 1,500 views and a hundred requests. By the third day, over 3,500 views and over 400 requests to see it. I couldn't keep up. I couldn't answer my phone any more; I put it on silent. People were begging — “I don't even need to see it, we'll rent it sight unseen.” I said no, we're not doing that. So I decided to show it for one day, one hour. I picked a Thursday between one and two in the afternoon — the most inconvenient time possible, when everyone's at work. It was a madhouse. I stayed an extra 30 minutes just to close up because I couldn't get people out; they kept coming after the time was over. I had 10 solid applications on the spot, and 32 more came in that night. Forty-two applications for one property. **Debbie:** Let me play devil's advocate. Do you think you priced the rent too low? **Mary:** I don't think so — and when you hear what they had to come up with, it'll make your head spin. The people who applied had over 750 FICO scores. They paid for their own applications. They had over $50,000 sitting in the bank, great jobs, little debt. I had so many choices. I was shocked that they wanted to be in this rat race, begging for a rental, when they could have gone out and bought. **Debbie:** They can. They may not know they can. **Mary:** And it wasn't cheap to get in. First month, last month, security deposit, pet deposit — $10,900 just to get the keys in their hand. I had people offering to pay a full year up front on top of that. I said no. That makes me nervous — are you never going to pay after that? How do I get you out in a year? ### The math on the same condo **Debbie:** Let's back up, because I agree with you. Somebody who can come up with that cash, has a 750 score, $50,000 in the bank and verifiable income could absolutely get a loan. What's the rent? **Mary:** Three thousand a month. Two bedroom, one and a half bath, in Huntington Beach. **Debbie:** So if somebody bought that unit today with an FHA loan at three and a half percent down — principal, interest, taxes, insurance and HOA dues — that payment is about $4,800 a month. I can see why someone says: I can't afford $4,800, I can afford $3,000 in rent. I completely get that thought process. What they're missing is that the $3,000 is thrown away. They're not getting the property taxes as a deduction, or the mortgage interest, or the mortgage insurance, which as of this year and the two before is deductible — the IRS can change that. So what someone paying $4,800 a month actually gets back on their income taxes puts them, at my rough guess, in the zone of about $3,500 a month. Everyone's income and tax base is different. **Mary:** When I bought my primary residence I took it in the shorts — our rate was so high. But within six months our equity had gone up and I was able to refinance as rates dropped. Right now rates are going up, but they'll turn around and come back down. Maybe you suck it up in the beginning. That's what we did, and we've never left the house since, because it just keeps going up in value. We thought we were overpaying. Now we're thinking, thank God we bought it, because we couldn't afford it today. **Debbie:** And the equity gained over time. We're likely to see rates start coming back down within the next 12 months, which is the chance to refinance. As values increase, you're no longer in an FHA loan — you're in a conventional loan and you can get rid of monthly mortgage insurance. Let me re-run it. The first payment I gave used a 5.625% FHA rate, which is roughly where we've been, with most people buying the rate down a bit. If we go back to something more like normal for 2017 onward — call it 4.5% — with no mortgage insurance, that same payment with principal, interest, taxes, insurance and HOA is $3,527\. Now you're there. That's Mary's point: you have to start somewhere. You get the deductions, which means a bigger return, and when rates come down and values go up, you refinance. And you own it. ### Get fully qualified before you need to be **Mary:** The key is that people should get qualified even if they're not buying yet. Find out what you can do. Because when you finally find the property you're ready to pull the trigger on, if you haven't gotten your documents to a lender, you're going to lose out. Nobody is going to sit and wait for you to gather qualifying documents. If you're not one of the first one or two offers in, they won't wait. **Debbie:** And the other side of it: the $3,000 a month somebody is paying you — that's money they're throwing away. I understand if Huntington Beach is where they want to live. But there are condominiums further south, in Lake Forest, that cost a lot less than Huntington Beach. Maybe Huntington is your excitement spot, but owning the property is more important. Get into something for $400,000 or $450,000 at the same monthly payment, own it, save a bit more, wait for rates to come down, refinance to a lower payment, rent it out. Now you have a stepping stone. **Mary:** People are renting out rooms to supplement, too — I think it's around $1,200 for one room in a house. If you're willing to have a stranger living with you, that's what's happening right now, because landlords can name their price. And there's nothing on the market. Even the Inland Empire is having a hard time with rentals. It doesn't matter where you look. **Debbie:** At least you have an asset. If your money is in stocks and bonds, it's paper. **Mary:** That was my thinking. If I put my money into a property, I have something tangible. And people always have to rent, so it's passive income for retirement. Even if values drop, rents hold and keep going up. **Debbie:** Right — you leased it for 12 months, and in 12 months when the contract is up you can choose to increase the rent. Here in California you can raise it by five percent. ### Why the rental market got this tight **Debbie:** Do you know why it's so inundated? **Mary:** I asked people why they were moving. Some are coming back — they sold at a premium and moved to Texas, Tennessee, Idaho, Utah, and it didn't suit them. One woman said she'd spent four months under tornado warnings and couldn't take it any more. And there are landlords who were raked over the coals during the period when you couldn't remove non-paying tenants. They got so stressed that now they're selling. They're being decent about it — giving people two or three months — but those tenants have been searching that whole time and still haven't found anything. Others are renovating, because a renovation lets them re-list it at a much higher rent than the five percent annual increase would allow. They don't want long-term tenants. As a tenant, you have no security. Once you're month to month, they only have to give you 30 days' notice. **Debbie:** I want people to hear this. I don't sugarcoat anything. A $3,000-a-month rental takes $10,900 to get into. Yes, the mortgage payment would be higher — $4,800 — but here's my mom rant: you need to own something. Maybe your little booty can't be in Huntington Beach. Maybe it needs to be somewhere less expensive. Or talk to your CPA and ask what your refund would look like if you were paying that much per month with those property taxes and that interest. **Mary:** And if someone bought a fixer, aren't there loans to help fix it up, which would add value? **Debbie:** There are. FHA has a renovation loan called a 203(k), and there are conventional renovation loans as well. Nobody has to live in a dump — you can buy something, get it fixed up, live in it, and let it gain value. ### Q&A: the down payment problem **Debbie:** A viewer says the hard thing for someone like him is putting together a down payment, let alone a bigger one. That's exactly what we're talking about. The person who moved into Mary's condo needed $10,900\. What I want you to hear is that the same money could get you into a purchase. We have down payment assistance programs. In California there's CalHFA, and people assume they make too much money to qualify — CalHFA's income guidelines are actually quite lenient. He's in Washington state, and CalHFA is California-only, but there are down payment assistance programs available there too. What you really need is enough to cover closing costs, which are usually about two percent of the sales price — sometimes a little less, and sometimes you can get the seller to pay them. Assume worst case: two percent of $500,000 is $10,000\. So if you have the same money you'd need for a rental, there's a very good chance we can get you into a home to buy. Maybe a little outside your area. And in most parts of the country the gap between rent and a mortgage payment isn't nearly as extreme as the example we just did. And add the deductions on top. If your refund changes by $10,000 where you were getting nothing back before, that's $833 a month — put it in an account and pay it to yourself monthly, and it helps subsidize the higher payment. Plus you own the place, and you have the stability a rental can't give you. ### What people wrongly assume disqualifies them **Debbie:** The other thing is that people assume they need 20% down, or a certain income, or a certain credit score. That's just not the case. Stop assuming and pick up the phone. The worst thing we say is “not yet” — and then we tell you what to do about it. If someone calls and says “I make money but I don't claim it, so I know I can't get a loan” — no, you can't get a traditional loan. But did you know that with 20% down there are options even if you can't show income at all? Or that with business bank statements for the last 12 to 24 months and 10% down, there are programs for that? People don't know, so they assume no. Same with judgments, or IRS debt. With IRS debt, get yourself on a payment plan and make the payments on time — there's a lot we can work around. But if you don't call and ask, you don't know, and you're not taking the steps to be ready to buy. **Mary:** And there have been people with really bad credit who six months later were able to purchase, because they made the choices you told them to make. **Debbie:** Here's the thing that should get people's attention. If you're a landlord with 42 applications in front of you, you pick the strongest file. Someone with a 630 score and collections on their report is probably not the tenant you choose — but we can do a loan for someone with a 630 score and some collections. It may genuinely be easier right now to buy a property than to win a rental. And landlords aren't casual about it any more; a lot of them use property management companies running full background checks. ### Q&A: inheritance and first-time buyer status **Debbie:** Back to our viewer's question: if someone who never owned a home inherits a condo, wants to sell it and buy a home, do they still qualify as a first-time home buyer? He's in Washington state, but it doesn't matter what state you're in — these are Fannie Mae, Freddie Mac and FHA guidelines. The guideline is that if you have not owned real property in the last three years, you're considered a first-time buyer. Your situation gets a little sketchy because it depends what happened with the inheritance. If the property was held in a family trust — grandma's property, the trust says you'll inherit it, but title never moved to you — then the trust is selling it, you never had home ownership, and you'd still be a first-time buyer. If the trust transferred title to you and you're now the owner of record of that condominium, then you're not; you own real property. Now let me back up, because people think first-time buyer status is a bigger deal than it is. For many down payment assistance programs, yes, you have to be a first-time buyer. But if you're not using assistance and you have 3%, 3.5% or 5% down, you don't need the title of first-time buyer at all. You can get an FHA loan if you've bought a house before. You can get one if you still own a home. There are also assistance programs that don't require first-timer status but do require you not to own property — so selling the house you have is fine; keeping it isn't. ### How to reach the show **Debbie:** One clarification, because people text questions to the 844 number: that line is an automated notification service, not a monitored chat. It exists to send you the link when we go live. If you have a question and you're not ready to call, go to mortgagemomradio.com and use the contact form — those come to me and I answer them — or email questions@mortgagemomradio.com, which also comes to me. Some questions are too involved to answer by text, and if a question is elaborate enough I'll write back and ask for a good time to talk. ### Wrap-up **Debbie:** If you're a tenant, or you're out looking for a rental right now, what's the harm in calling to find out what a payment would look like, how much you'd qualify for, and how much money you'd need? You might be very pleasantly surprised. You might not be able to buy in the exact area you want. The opportunity of home ownership matters more than being down by the beach next to your favorite bar. We answer the phone on weekends too — if you get voicemail we're on another line, so leave a message and you'll get a call back, usually within an hour or two. We can't call you back if we don't know who you are. To know when I go live, text the word MOM to 844-935-3634 — 844-WE-LEND-4\. Just M-O-M; you'll get one text a week telling you the topic with a link to join. We stream on Facebook, Twitch and YouTube. And it's mortgagemomradio.com — don't forget the “radio.” I'll be back next Wednesday, same time. Talk to you all real soon. Debbie Marcoux is licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act, NMLS ID #237926, and additionally licensed in AZ (0941504), FL, GA, HI, ID, IL, NV, NC, OR, TN, TX, and WA. Rates and figures discussed were current as of the air date of May 10, 2023, reflect national conforming averages, and are not an offer of credit or a rate quote. Debbie Marcoux is not a financial advisor; consult qualified professionals about your individual situation.