Being “upside down” on your mortgage—owing more than your home is worth—can feel like a roadblock if you need or want to move. Maybe your family has outgrown the space, your job requires relocation, or you’re simply ready for a change. The good news is: being upside down doesn’t always mean you’re stuck. In fact, you might be able to turn the situation into an opportunity to build wealth through real estate investing.
How It Works: Keep Your Current Home as a Rental
Instead of selling your home at a loss, you can keep it and rent it out. Lenders often allow you to use rental income from your current property to help you qualify for a mortgage on your next home. Essentially, your tenant’s rent can cover the mortgage while you move forward with your new purchase.
What Lenders Look For
To make this work, lenders will need to see:
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A tenant ready to rent your home. They’ll want proof that someone is willing to pay rent equal to or greater than your current mortgage payment.
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A signed lease agreement. In most cases, the lease itself and a security deposit or first month’s rent check will be required as documentation.
This allows the lender to count the rental income toward your debt-to-income ratio, making it possible for you to qualify for a new loan.
Note: Speak to your lender to confirm that this option is a good fit for you before you try and secure a tenant!
Becoming an Investor (Even If You Didn’t Plan To)
While you may not have set out to become a landlord, keeping your home as a rental effectively turns a challenging situation into an investment strategy. Over time, your tenant pays down the mortgage, and you maintain ownership of the property. With appreciation, you could eventually sell at a profit or continue earning passive income long term.
Don’t Want to Manage a Rental? You Don’t Have To
Managing a rental property can sound intimidating, but you don’t have to do it yourself. A professional property manager can:
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Market the property and find qualified tenants
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Handle rent collection
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Coordinate repairs and maintenance
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Manage tenant communication
While they charge a management fee (often around 8–10% of the monthly rent), for many homeowners—especially first-time landlords—the peace of mind and time savings are worth it.
From Frustration to Opportunity
Being upside down on a mortgage isn’t ideal, but it doesn’t have to stop your plans. By renting out your current home and using that income to purchase your next, you can move forward while also starting (or growing) your real estate investment portfolio. Sometimes the best opportunities come out of the most unexpected situations.