Debt to Income ratio for STR's....

[Noah Weitzman]

Hey Everyone! Thanks for reading this! we are looking to purchase another STR but our DTI is too low. This is because the other STR we own cant be used as monthly income. Has anyone found a good way around this? It is my understanding that you can use 75% of the fair market rent for a property for Fannie loans. Our lender did not know about this but wondering about others experiences? Thanks!

[Alex Bekeza]

@Noah Weitzman There are quite a few "commercial" options for 1-4 unit STRs where there is zero DTI calculation. Ideal for self employed investors or those who have for one reason or another exhausted their conventional options. They underwrite based on your FICO, experience and DSCR. It's a bit of a long winded conversation but I'd be happy to chat more with you. Rates will be a little higher than conventional (figure mid 5%-mid 6% range) but there are several other advantages to compensate for that. These commercial lenders are racing trying to figure out a way to better serve STR investors. The problem in the past has lied within not being able to package STR loans to be resold on Wall Street but looks like either people are figuring it out or some of these portfolio lenders are just servicing the loans themselves.

Your lender is probably top notch with conventional financing but in the dark regarding these DSCR based programs.

What market is the property you're looking at in?

All the best,