Can You Afford a New Home Without Selling Your Current One?
Reading Time: 6 Minutes
Key Takeaways: You can qualify for a new mortgage by using the 75% Rule to neutralize your current debt. By leveraging the 2026 SALT cap increase and 100% Bonus Depreciation, you turn a primary residence into a tax-shielded wealth engine while avoiding Portland's Relocation Assistance traps.
Most Portland homeowners in 2026 are caught in the "Interest Rate Trap." You want a larger home or a better neighborhood, but you are unwilling to walk away from a 3% or 4% mortgage on your current residence.
The good news: You don’t have to. By converting your primary residence into a rental, you can leverage your current home to pay for your next one. Here is the financial blueprint for the "Keep and Buy" strategy in today’s market.
1. The Lender’s Secret: The 75% Rule
The biggest hurdle to buying a second home is your Debt-to-Income (DTI) ratio. Lenders typically won't let you carry two full mortgages unless your income is massive.
However, Fannie Mae and Freddie Mac allow you to use 75% of your future rental income to offset the mortgage debt on your departing residence.
The Math:
Current Mortgage (PITI): $2,800
Market Rent: $3,600
Lender Calculation: $3,600 X 0.75 = $2,700
Net Impact: Your lender sees a debt of only $100 ($2,800 - $2,700) rather than a $2,800 liability.
2. 2026 Tax Alpha: The OBBBA Advantage
The passage of the One Big Beautiful Bill Act (OBBBA) has fundamentally changed the ROI for Portland landlords this year. There are two primary "wealth accelerators" you must utilize:
The $40,400 SALT Cap
Previously, the $10,000 State and Local Tax (SALT) cap penalized Portlanders with high property and income taxes. In 2026, that cap has been raised to $40,400.
The Benefit: You can now deduct nearly four times the amount of local taxes against your federal income, significantly increasing your annual cash flow.
100% Permanent Bonus Depreciation
As of 2026, bonus depreciation is no longer phasing out; it is 100% permanent.
The Strategy: By performing a Cost Segregation Study on your rental, you can "accelerate" the depreciation of items like appliances, flooring, and landscaping. This often creates a massive "paper loss" in Year 1 that can offset your W2 tech or construction income.
3. Navigating the "Portland Trap": Relocation Assistance
In Portland, the risk isn't just finding a tenant; it's the Relocation Assistance law. If you don't file correctly, you could owe a tenant $4,500 if you ever decide to sell the home or move back in.
The Solution: REA Form 5
To execute a "Keep and Buy" safely, you must file a Relocation Exemption (Form 5) for a "Temporary Rental of a Principal Residence" before the lease is signed. This allows you to rent the home for up to 3 years while maintaining the right to move back in or sell without paying relocation penalties.
4. The Equity Wash: Funding Your Down Payment
If you don't have the cash for a down payment on the new home, don't tap into your 401(k). Instead, consider a HELOC (Home Equity Line of Credit) on your current home before you move out.
Lenders are much more likely to give a high-limit HELOC on a primary residence than on a rental.
Once you move and convert the home to a rental, the HELOC stays in place, providing the liquidity you need for your new purchase.
Summary Checklist
[ ] Verify Equity: Ensure you have at least 20–25% equity in your current home to satisfy 2026 lender requirements.
[ ] File Form 5: Protect yourself from Portland’s relocation triggers immediately.
[ ] Consult a CPA: Map out how the $40,400 SALT cap impacts your 2026 tax liability.
[ ] Hire a Professional: Ensure your 8% management fee is factored into your DTI math to prove the investment's viability to your lender.
Recommended Resource: How “Buy and Hold” Real Estate Will Make You Rich
In this video, experts from BiggerPockets discuss why the "Buy and Hold" strategy remains the most reliable powerhouse in the financial landscape [00:58] and how to pick the right properties for long-term success [06:40].
