Debt to income issue

6 Replies

I am looking to get a rental unit. I have a home with 50% equity. 600k. Owe 288k. My income is 90k that I can prove from my full time job. I have a side business that is profitable at estimated 50k for the year. Banks are not counting this income yet.  

I have zero debt outside the house.  With my property tax and mortgage I get denied for mortgages for the second property.   

look at commercial portfolio lenders they look at  the DSCR for the deal instead of DTI-- you'll pay a little more in interest and you'll probably need 25% down.

How long have you owned the side business?  What kind of cash goes thru your statement every month?  This sounds like a perfect bank statement deal.

Just FYI plan going into it, that this is going to be a nightmare, crazy deal, and its going to take 60 days to close but if you have a good broker it will close, it just takes time.

We were in the same situation, equity in primary, no debt other than the primary mortgage, and similar income. We took out at HELOC and used that for the 25% downpayment on the rental. The payment of the HELOC was added as an expense and still cashed flowed. We didn't have any issues getting the loan. In your case, you could even pay for the whole amount, 100-125k and possibly BRRRR your original amount out. Hope this helps.

I'd really consider having your financials together and being ready to file taxes ASAP after the new year. The extra 50k will go miles in what you can borrow. I don't think portfolio lenders will look at the primary residence. 

The other option is hard money to get a deal locked in then look to refi both homes with better turns once you have good tax return. You may have enough for a bank statement loan, but that will still be in the hard money cost range.