Funding Options for High Debt to Income Individual

9 Replies

I would like to buy my first investment property. I currently own my own home. 

I want a 4-plex, but I don't qualify for a loan because the cost is too high given my debt-to-income ratio. What are my options here? 

I can buy a single family and in 2 years the bank will let me realize that rental income as income to use towards another mortgage, but waiting 2 years between every purchase is just too long. 

I am in the Pontiac, MI market and there are some great options here, home values are on the rise and I have insider knowledge into the some of the improvements that are coming to the area and want to buy before the market really starts to gain value. (My house doubled in value over the last 2 years) 

Thank you!!!

Talk to another loan officer. My local credit union says that they recognize rental income after 1 year of land lording experience if I can produce full P&L for the property and documentation to support continued operations. Effectively it's a business loan with recourse at this level. 

Look around your area for more financing options and talk to them. Not all underwriter and loan officers are alike.

@Doran Brooks , Just curious, what is your debt to income ratio, and is the debt a mortgage, student loans, or other?  It’ll help me know what to expect when I go through the same process. 



You could always try to go private lender or hard money loan or even a commercial loan. It all will depend on the LTV of the property, credit score, and a few more things. I am interested in talking to you about this maybe I can help explain or answer questions you might have.

Account Closed 

Yes, please message me if you would like to talk further, I'd really appreciate that! 

Hard money is too high of an interest rate, 15-18% for a rental wouldn't make sense. 

If you have some more input on commercial loans and how they work? 

Thank you

You can find another bank. Some lenders use rental income even if it hasn’t been 2 years.

Originally posted by @Doran Brooks :

@Tom Arena 

Thank you. I will look around for other loan officers. Will I have more luck at bigger banks, or should I look into smaller banks/ credit unions? 

In my experience, conversation with local lenders have been more successful. Their underwriters are training in evaluating local markets and they tend to be more flexible.