maximum financing potential

6 Replies

Is this the maximum case for financing properties through banks?

Number of properties that can be financed: 10

Max amount per loan: 417k 

Rental income from property that counts towards DTI: 80%

Age of rental income: 12 months or more

DTI: 45% (all sources)

Thank you very much!

Those are conventional lending terms. For conventional loans, that's pretty close. Banks generally use 75% of the new rent less the new PITI payment for computing net rental income from the new property. Existing ones use your tax returns. DTI is a more complex calculation for rentals, too. If net rental income is positive, it adds to your income and helps your DTI. If net rental income is negative, it adds to your debt and hurts your DTI.

But if you find a portfolio lender you can have more than 10 loans.  You're into commercial type financing, so you won't get 30 year fixed.  You may be able to find 15 year fixed or loans with ARMs or balloons.

Thank you, Jon.  So the new rents can be a month or two old? Does this have to be a lease or can AirBnB work? Any other ideas. We bought in cash and are coming up with a strategy to make that cash stretch over more purchases.

@Alex Johnson  depending on the lender and how your finances look you should be able to refi it once the property is leased.  I personally haven't used them.  If you need a portfolio lender because of the # of loans you have and the complexity of your finances any local business bank should give you loans....  give me a call if you want to hear my stories dealing with portfolio lenders....

I have no idea how a lender will consider airbnb income.  I suspect most lenders don't either.  Most lenders will not count roommate income for loan qualification purposes so I wouldn't be too surprised if they don't count airbnb, either.  

I think there are also potential legal issues with airbnb rentals that lenders are going to be concerned about. As far as I can tell, many are illegal rentals that violate HOA rules, zoning codes or both. But if yours aren't then I would expect they would at least look at the actuals from existing units.

Most lenders do require two years landlording experience before they will count rental income at all.  After that, they will consider both existing and new properties.  They usually require the appraisal to include a rent estimate and then use that number, as far as I know.   Again, though, I'm not sure how they would deal with airbnb rentals. 

@Alex Johnson  

Yes, I would agree with @Jon Holdman  , lenders likely will not consider AirBnB income as it's more speculative than income coming from a long-term lease agreement. 

Sorry, but any requests for specific lenders or info about lenders has to go into the Marketplace.

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