Hello, I currently own a duplex. I live in one side and the other is rented . I would love to buy another property either a single family or another duplex but I am not qualified for a mortgage because of my debt ratio. I have a W2 job which brings $35.000 a year. I have no other debt besides the duplex I currently own and owe $150.000. Any suggestions on what to to do to get another property.
Lender · Boston, MA · Member since 2023 · 415 posts · 95 votes
2y
Hi, @Marie Herard. Look into DSCR loans, as they will be underwritten based on the income the property generates and its debt obligation as opposed to your personal income.
Lender · West Palm Beach, FL · Member since 2017 · 306 posts · 122 votes
2y
Hi Marie, I would have the same suggestion about using a DSCR loan--it's essentially made for people in your exact situation. These loans look solely at the property's income, and won't consider your DTI or personal income. Most of the time the requirement is that the DSCR ratio is above 1.00, which just means that the rental income of the property has to be at least as much as the mortgage PITI payment. The minimum down payment is 20%, though you'll get a better interest rate if you put 25% or more down. Feel free to reach out if you'd like me to explain more in-detail the requirements!
To those of you who are suggesting she do a DSCR loan, I'm curious as to how your lenders are seeing her property? She lives on one side she said - so it's not an investment property it's a primary. The other side obviously is rented, but for her to do a DSCR on her own property she would need to move out - rent both sides - THEN she could do a DSCR loan and cashout to get liquidity.
Ok. I don’t have any down payment and if I could do any down payment it would have to be 5-10%. My goal is to rent both sides and move to the new property. any other suggestions?
Thank you.
Hello there I am so confused now you are right about everything I live in one side and rent out the other. My plan is to move out and rent both sides and move to the new one. I am not qualified to get another property because of my debt ratio.
Ok. I don’t have any down payment and if I could do any down payment it would have to be 5-10%. My goal is to rent both sides and move to the new property. any other suggestions?
Thank you.
Hello there I am so confused now you are right about everything I live in one side and rent out the other. My plan is to move out and rent both sides and move to the new one. I am not qualified to get another property because of my debt ratio.
Hi Marie,
If the new property would be a primary residence, you could put 5% down for 2-4 units. We can confirm your Debt-to-income ratio to figure out how much you could afford--feel free to reach out if interested.