How to get approved for a 2nd loan with a high debt to income?

2 Replies

@Brooke Reeves

Hopefully a hypothetical situation!

So when you get your first property, you purchase at a price where it will cash flow positively in a way that will actually reduce your debt to income ratio. Banks will consider a percentage of rents as income which offsets the added debt service from acquiring the investment property.

I think I answered your question?

Originally posted by @Brooke Reeves :

When you go to get your 2nd property, and your debt is obviously way higher then your income, how do you do this?

So as stated already, if first property is cash flowing that can help offset the debt. This helps keeps the DTI monster from killing your investment plans. Some banks want x amount of rent history, but then other banks are more flexible. So make sure you understand any minimum rental history requirement.

Another great scenario is with a 2nd property sometimes a lender can count the pontential rental income (or a percentage of it )that the property produces. This can really help kill the DTI beast. So that can be another weapon to have ready.

Then there is the nuclear option....now first rule before you push that red button is don't blow your self up. But you can just bypass DTI altogether and look at alternate sources. It will cost a little more, maybe even alot more. There are some private, hard money, and commercial lenders who don't even look at DTI. These lenders will look at the cash flow of the individual property you are getting a loan on. They will not consider your income, other debts, or mortgages. Then DTI is pretty much annihilated and not even a factor.