Investment Properties Affecting my DTI for Primary Residence

9 Replies

Hi all,

Hoping some of you wise investors will be able to help my current situation:

- husband and I own 4 investment properties including our current primary residence (2-family)

- only 1 of these properties is in my name (our current primary residence)

- we have joint tax returns, so income & expenses of all showing up on my tax returns

- we are looking to move, and since my husband recently moved to self-employment income, my usual go-to broker says we are severely limited on our ability to qualify for a new primary mortgage, due to DTI that takes into account all investment properties.

- If we used just my income, we should be fine on amount we want for new property mortgage, but broker is also saying all properties counting against me because they are on our joint returns

- to complicate things, I am looking to use a VA loan for our new primary residence mortgage

Can anyone help?  I'm in Massachusetts and have no idea what "investor-friendly" lenders there are?  I've tried 2 brokers, and I'm guessing big banks will have same issue.   (I should be OK even if I have to include that property).

Thanks!

HT

Can your broker use rental income as part of your income?  I know at least on my part, the income from rental property must have at least xxx# of months renting out first to offset that debt/mortgage.  I think it would be harder to go w/ the big banks.

Renting your primary residence might be an option.  Especially a private landlord is likely to be more flexible than a mortgage underwriter in considering your rentals.

After a couple years you should be able to use the full rental income of your primary residence and you will have some time to save up a down payment.  Also it is more likely that self-employment income can be counted with a track record of a couple years.

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This is not a request for a loan or lender.  Such requests are allowed only in the Marketplace.  Advice only, in this thread, please.

You can go and amend your last 2 years of tax returns to married filing separately and pay the fines and penalties for that.

But then you can apply without any of the stuff just in his name showing up.

Always remember when applying for a mortgage the quality of the collateral, the actual quality of the borrower and your actual ability to pay back the loan are all far less important than the loan officer and underwriter being able to check off the boxes people like the most on a bunch of forms that will go in a file never to be seen again.

@Heather Takle Welcome. It's always 75% of your rental income that can be credited toward income on conventional lending. Once you've got rental contracts on your O/O 2 family that should help.

Or maybe have your husband go back to his W2 job?

@Heather Takle

Are you the veteran? If you are the veteran than you can be solely on the VA loan and as long as you are not on the deed or loans for the other properties, your joint tax returns don't disqualify you. If your husband is the veteran..... He needs to be on the loan.

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