How does DTI work for multifamily

Question

Hi everyone!

Initially I was going to invest in a house and rent it, but this whole "House Hacking" thing looks great but I do have a question:

To qualify for a loan they obviously use the DTI ratio, but when it's a duplex/triplex/quadplex in which I'm going to rent out units, does that help with the DTI or I still have to qualify with my income alone?

Thanks everyone!!!

Jacques Wurms · Answer

Hello Carlos,

I have several lenders that I work with, that might be able to help you.

I have one mortgage banker that will put you through underwriting without an actual property.

The only thing you need to close the deal is a sufficient appraisal. The advantage of a mortgage bankers versus a mortgage broker is that they work with their own money.

Carlos C. · Answer

Oh ok, I completely understand both answers.

I guess right now my question would be to people out there in the Miami area, and see if they have any knowledge of that type of lenders, or any recommendations in general.

Thanks again for your replies!

Blair Poelman · Answer

lots of depends i see on this: may depend on the lender, and/or depends on your state, and/or possibly depends on your city - and depends what (how many units) is classified as multi-family, apartment, or commercial.

Some places 3 or more is considered an apartment, others it's 4, some it's 2 -so just depends.  The zoning of the property should give you that answer - check with your county land records dept.

Then the next step is find a lender that's friendly with whatever that property type is, and their underwriter will ultimately be the guys that make the call to consider future rents or just your personal income. I don't know of any name brand lender that offers an easy-to-get loan based on what the future income projection might be. There are some out there, but my experience getting those loans has proven challenging and has taken a very long time (8-10 months on average).  Lenders will usually, if not always, ask for a personal guarantee, and i've seen countless instances where the lender asks for an assignment of rents in the case of a default.

Sorry - kind of a roundabout answer,

Best of luck.

Mitch H. · Answer

I always thought it was on your income alone.  However, a recent lender I spoke with said that was not the case (for that lender), and that they would perform a market study for the units and loan on that.

They basically gave me the green light to spend whatever I wanted (so long as it was under the Jumbo line).

Seems a bit fast and loose to me.