Qualifying for Investment Property Loan, Denied 1st Try

2 Reply

Dan Rowley

Investor · Cary, NC · Member since 2012 · 214 posts · 194 votes

4y

@Matthew Rubino Rule of thumb is you need a debt to income ratio of <50%. Do you have / you must have other types of debt that contributed to your 60% DTI = maybe student debt, auto loans, business loans, etc.?

David Lambert

Member since 2022 · 41 posts · 20 votes

4y

If his DTI is too high for a conventional couldn't he try a DSCR loan through a private money lender?

[email protected]413-348-8346

Stephanie P.Pro Member

Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes

4y

Quote from @Matthew Rubino:

Hello bigger pockets community,

Wanting 2022 to be the year I get my first investment property and my target area is outside of Austin. I connected with a realtor in the area who referred me to a lender. After weeks of turning in the requested documents I was surprised to find out the loan officer said underwriting could not qualify me for any type of loan even if I had the cash to put 80% down (realistically I would like to put about 20%). They said my debt to income was about 60%.

This was with Old Texas Mortgage.

Wondering if anyone has any thoughts/advice on what types of loans they use to qualify for single family investment properties?

We own a single family residence, my all in monthly expenses are about $6k and in 2021 I made about $25k a month and 2020 about 12k a month. I have about $250k in savings as well so I was really surprised by the results from the lender who said "all lender's who use fannie mae and freddie mac loans will give you the same results." They seemed to use a combined figure of 2020 and 2021.

Your insights are much appreciated as I won't let this bump in the road throw me off course.

Thank you,
Matthew

Not sure about your DTI situation (student loans, car loans, whatever), but a DSCR loan would work well for you. 80% loan to value for a purchase is standard and with no income verification like tax returns or paystubs, you will qualify as long as the property does (rents must wash out the mortgage).

Stephanie

1 Reply

Matthew CrivelliBusiness Member

Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes

4y

If you have cash & credit you can use institutional money. Short & long term loans with high leverage. (bridge & 30Y fixed) No DTI, employment, or taxes requirements. Closings are also quicker. The down side is the loans are typically more expensive than what a bank will offer. Would love to chat. @Matthew Rubino

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Account Closed

Lender · Columbus Ohio · Member since 2022 · 17 posts · 8 votes

4y

Matthew you should look into DSCR investment loans. The lender does not validate personal income or debts but rather ensures that the property can generate enough cash flow to pay the property taxes, insurance, principal and interest.

Andrew Garcia

Lender · Charlotte, NC · Member since 2022 · 739 posts · 410 votes

4y

Hi @Matthew Rubino, you could look into a DSCR loan where they base it on the proposed income of the property rather than your personal income. You could also look into a non-QM loan where they calculate income a little differently.

Let me know if I can be of any assistance.

Paul Camuto

Real Estate Coach · Robbinsville, NJ · Member since 2017 · 185 posts · 99 votes

4y

Quote from @Matthew Rubino:

Hello bigger pockets community,

Wanting 2022 to be the year I get my first investment property and my target area is outside of Austin. I connected with a realtor in the area who referred me to a lender. After weeks of turning in the requested documents I was surprised to find out the loan officer said underwriting could not qualify me for any type of loan even if I had the cash to put 80% down (realistically I would like to put about 20%). They said my debt to income was about 60%.

This was with Old Texas Mortgage.

Wondering if anyone has any thoughts/advice on what types of loans they use to qualify for single family investment properties?

We own a single family residence, my all in monthly expenses are about $6k and in 2021 I made about $25k a month and 2020 about 12k a month. I have about $250k in savings as well so I was really surprised by the results from the lender who said "all lender's who use fannie mae and freddie mac loans will give you the same results." They seemed to use a combined figure of 2020 and 2021.

Your insights are much appreciated as I won't let this bump in the road throw me off course.

Thank you,
Matthew

Contact a local neighborhood bank. Real estate agents have their "in-house" lenders that they use to get credit with. You have a single family residence already with a loan. Did you talk to that bank?

[email protected]818-269-7983

Erik EstradaBusiness Member

Lender · Member since 2022 · 6k+ posts · 1k+ votes

4y

Quote from @Matthew Rubino:

Hello bigger pockets community,

Wanting 2022 to be the year I get my first investment property and my target area is outside of Austin. I connected with a realtor in the area who referred me to a lender. After weeks of turning in the requested documents I was surprised to find out the loan officer said underwriting could not qualify me for any type of loan even if I had the cash to put 80% down (realistically I would like to put about 20%). They said my debt to income was about 60%.

This was with Old Texas Mortgage.

Wondering if anyone has any thoughts/advice on what types of loans they use to qualify for single family investment properties?

We own a single family residence, my all in monthly expenses are about $6k and in 2021 I made about $25k a month and 2020 about 12k a month. I have about $250k in savings as well so I was really surprised by the results from the lender who said "all lender's who use fannie mae and freddie mac loans will give you the same results." They seemed to use a combined figure of 2020 and 2021.

Your insights are much appreciated as I won't let this bump in the road throw me off course.

Thank you,
Matthew

It would be a great idea to consult with a mortgage broker licensed in Texas to see what options you have available full doc and lite doc. DSCR can be a great option, but many that promise and underdeliver.

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OP

New to Real Estate · Member since 2022 · 7 posts · 0 votes

4y

Quote from @Paul Camuto:

Quote from @Matthew Rubino:

Hello bigger pockets community,

Wanting 2022 to be the year I get my first investment property and my target area is outside of Austin. I connected with a realtor in the area who referred me to a lender. After weeks of turning in the requested documents I was surprised to find out the loan officer said underwriting could not qualify me for any type of loan even if I had the cash to put 80% down (realistically I would like to put about 20%). They said my debt to income was about 60%.

This was with Old Texas Mortgage.

Wondering if anyone has any thoughts/advice on what types of loans they use to qualify for single family investment properties?

We own a single family residence, my all in monthly expenses are about $6k and in 2021 I made about $25k a month and 2020 about 12k a month. I have about $250k in savings as well so I was really surprised by the results from the lender who said "all lender's who use fannie mae and freddie mac loans will give you the same results." They seemed to use a combined figure of 2020 and 2021.

Your insights are much appreciated as I won't let this bump in the road throw me off course.

Thank you,
Matthew

Contact a local neighborhood bank. Real estate agents have their "in-house" lenders that they use to get credit with. You have a single family residence already with a loan. Did you talk to that bank?

thanks for the tip. my primary residence loan is with morgan stanley so I hadn't thought of asking them. I'll also look into a bank local to the area I am looking at. Thanks for the tips!

OP

New to Real Estate · Member since 2022 · 7 posts · 0 votes

4y

Quote from @Erik Estrada:

Quote from @Matthew Rubino:

Hello bigger pockets community,

Wanting 2022 to be the year I get my first investment property and my target area is outside of Austin. I connected with a realtor in the area who referred me to a lender. After weeks of turning in the requested documents I was surprised to find out the loan officer said underwriting could not qualify me for any type of loan even if I had the cash to put 80% down (realistically I would like to put about 20%). They said my debt to income was about 60%.

This was with Old Texas Mortgage.

Wondering if anyone has any thoughts/advice on what types of loans they use to qualify for single family investment properties?

We own a single family residence, my all in monthly expenses are about $6k and in 2021 I made about $25k a month and 2020 about 12k a month. I have about $250k in savings as well so I was really surprised by the results from the lender who said "all lender's who use fannie mae and freddie mac loans will give you the same results." They seemed to use a combined figure of 2020 and 2021.

Your insights are much appreciated as I won't let this bump in the road throw me off course.

Thank you,
Matthew

It would be a great idea to consult with a mortgage broker licensed in Texas to see what options you have available full doc and lite doc. DSCR can be a great option, but many that promise and underdeliver.

This lender was with Old Texas Mortgage so I assume his broker was licensed in Texas. What are full and lite doc?

OP

New to Real Estate · Member since 2022 · 7 posts · 0 votes

4y

Quote from @Andrew Garcia:

Hi @Matthew Rubino, you could look into a DSCR loan where they base it on the proposed income of the property rather than your personal income. You could also look into a non-QM loan where they calculate income a little differently.

Let me know if I can be of any assistance.

Thanks Andrew. Any downsides or major differences when looking at a DSCR or non-QM loan I should be aware of? Thanks for your time.

OP

New to Real Estate · Member since 2022 · 7 posts · 0 votes

4y

Quote from @Account Closed:

Matthew you should look into DSCR investment loans. The lender does not validate personal income or debts but rather ensures that the property can generate enough cash flow to pay the property taxes, insurance, principal and interest.

Hi Zac, thanks for the reply. Any thoughts overall on the upsides and downsides to a DSCR loan?

OP

New to Real Estate · Member since 2022 · 7 posts · 0 votes

4y

Quote from @Stephanie P.:

Quote from @Matthew Rubino:

Hello bigger pockets community,

Wanting 2022 to be the year I get my first investment property and my target area is outside of Austin. I connected with a realtor in the area who referred me to a lender. After weeks of turning in the requested documents I was surprised to find out the loan officer said underwriting could not qualify me for any type of loan even if I had the cash to put 80% down (realistically I would like to put about 20%). They said my debt to income was about 60%.

This was with Old Texas Mortgage.

Wondering if anyone has any thoughts/advice on what types of loans they use to qualify for single family investment properties?

We own a single family residence, my all in monthly expenses are about $6k and in 2021 I made about $25k a month and 2020 about 12k a month. I have about $250k in savings as well so I was really surprised by the results from the lender who said "all lender's who use fannie mae and freddie mac loans will give you the same results." They seemed to use a combined figure of 2020 and 2021.

Your insights are much appreciated as I won't let this bump in the road throw me off course.

Thank you,
Matthew

Not sure about your DTI situation (student loans, car loans, whatever), but a DSCR loan would work well for you. 80% loan to value for a purchase is standard and with no income verification like tax returns or paystubs, you will qualify as long as the property does (rents must wash out the mortgage).

Stephanie

thanks stephanie. is something I could qualify for to purchase a property upfront?

[email protected]319-288-5382

Jared HottleBusiness Member

Real Estate Agent · Cedar falls IA Waterloo, IA · Member since 2020 · 902 posts · 549 votes

4y

I would reach out to a few other local banks and credit unions. If you have the cash for 20% down I would think you would find someone who would do it. Look for a bank that does debt service coverage based on the rental income and not someone who does debt to income of the guarantor. This should help as long as your debt service coverage meets their ratios.

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Andrew Garcia

Lender · Charlotte, NC · Member since 2022 · 739 posts · 410 votes

4y

Hi @Matthew Rubino, the major downside is the rate. It is going to be higher than a conventional loan. The down payment is higher (20%). The process itself is a little clunkier since each loan is manually underwritten but you can still close within 30 days if you are working with the right lender.

Frank Ygarza

Investor · Dallas, TX · Member since 2015 · 14 posts · 3 votes

4y

Quote from @Matthew Rubino:

Hello bigger pockets community,

Wanting 2022 to be the year I get my first investment property and my target area is outside of Austin. I connected with a realtor in the area who referred me to a lender. After weeks of turning in the requested documents I was surprised to find out the loan officer said underwriting could not qualify me for any type of loan even if I had the cash to put 80% down (realistically I would like to put about 20%). They said my debt to income was about 60%.

This was with Old Texas Mortgage.

Wondering if anyone has any thoughts/advice on what types of loans they use to qualify for single family investment properties?

We own a single family residence, my all in monthly expenses are about $6k and in 2021 I made about $25k a month and 2020 about 12k a month. I have about $250k in savings as well so I was really surprised by the results from the lender who said "all lender's who use fannie mae and freddie mac loans will give you the same results." They seemed to use a combined figure of 2020 and 2021.

Your insights are much appreciated as I won't let this bump in the road throw me off course.

Thank you,
Matthew

Hi Matthew, I'd love to dive in more into your situation and see if we can come up with a solution. I work with IKON mortgage in Dallas. We do both QM and Non-QM loans. Either give me a call or shoot me a message on here and let's connect.