Active Military with orders and a DTI problem

16 Replies

So, I'm active duty stationed in Washington DC. I bought a house in N. Virginia for $271k last July. I recieved orders to Beaufort, SC yesterday and have to report in 45 days (I think August 15th) . My plan had been to buy a house at every duty station and hold them. Obviously I would like to buy another house in South Carolina, The problem is my debt to income ratio will be far over 60%. I don't think the Virginia house rental income will count towards DTI or at least I don't know how to make that happen. I thought about entering into a lease option and using a VA loan when it's time to buy. I don't know where to find lease options but I don't even know if that would work either since I was'nt expecting to move and don't have the down payment now. Suggestions?

I'm sure going to try. This Will be my first time as a landlord. The MO I talked to said he couldn't help me, he's fired. I'm sure there's a way, I just don't know what it is. I need to do my homework on finding a tenant this week, look for a house, and figure out financing.

@Jarrod Rayner thank you for service as well. I would suggest you talk with someone who knows VA loan qualifications. Generally, lenders want to see two years of rental income to count it or some professional track record of management ability. But VA loans have there own rules and tend to be more lenient. It can't hurt to try.

Also, thank you for your service.  Does the military offer some sort of property management?  Maybe there is a management company that handles base housing (Pendleton uses a private company I believe) that can help and would possibly give you a discount and advice given your situation.  Since you were talking about buy and hold at each duty station, that same company might service other bases.  Just food for thought.

Definitely use a VA loan on the next one if you didn't on the first. Contact some online mortgage companies and give them your story. I suggest goodmortgage.com but you can also try Sebonic. They have great rates and will tell you what you qualify for. The VA is much easier to qualify than Fannie May. Good luck

@Jarrod Rayner  Thank you for your service.
The rent you receive can be counted as income. At my bank we take 75% (to account for expenses, rent gap, etc.).

Assuming you have total income (pay + rent) to cover your total debt you should be able to get a loan for a house in Beaufort, SC.

I am local to NoVA. Please let me know if I can answer any questions.

Upen Patel, Mortgage Banker

@Jarrod Rayner

Fellow service member here also stationed in DC. I don't know how using a VA loan will impact your ability to use the rent on your current property as income, but I have been able to do it on non-VA loans. My mortgage broker has been able to use my rental income from all of my properties, and I hadn't owned any of them for over 2 years at the time.

How will your current property do for cash flow?  NOVA is tough to cash flow in!  Best of luck with your upcoming PCS!

When I setup my LLC one of the first things I asked my bank about was if they would count rental income toward my DTI. I was told by my bank that they would count 70% once I had two years of rental history under my belt. From what I have seen on this site lots of lenders do the same thing although the % and rental history length may change somewhat depending on the lender.

To tag another member just put the @ sign in the text of the reply and their name will pop up below the reply box.  Click on their name and it will be added to your response.  

Most big banks will require longer rental history to start counting it, most around 2 years of tax returns.  Try to go to some of the smaller banks or online lenders and they will work with you more.  

I don't see any reason to transfer your currently owned property to an LLC, I have 5 in my own name now and protect my net worth with insurance. I use my LLC to flip and if I keep a rental it will go into my name. Just one strategy of many.

My husband is a current service member and we purchased our first home outside of Augusta, GA with a VA after living there a year. We then bought our second home a year later in Watertown, NY with an FHA loan because the purchase price was less then what was required for a second VA. I would just be sure to talk with your lender to see what they would like. We were originally planning on doing a second VA for our NY house, and our broker had no issue with our rental history. I'd consider an FHA as an option if you were not able to do a second VA, or if you wanting to save that option for another purchase.

Get a good mortgage broker. The 2 year thing for counting rental income is either based on it being an LLC (this would be considered self employment and almost always requires two years history and tax returns) or is probably what is called a bank overlay, meaning it is not a Fannie/Freddie requirement. Talk to Uppen Patel based on his response above. It looks like they lend nationwide and they could be exactly what you need.