LLC loans impacting DTI

[Stefan Hirniak]

Hi BP!

Hope everyone is doing really well. I am buying a new construction primary in May and hoping for some advice prior.

I have a relatively high DTI due to 7 other other conventional loans and my broker advised that a new investment prior to closing might impact my ability to close.

Our goal is to do an MTR on the new property and I understand we can’t count the income towards my ratios (since it won’t be on a tax return) which is my main concern.

I am wondering if buying the property in an LLC will help with the DTI issue. I know the load through the LLC will still have a personal guarantee since it's a SFH but wondering if this will show up when we go to close on the new primary.

Thanks a ton for the help and advice.

-stefan

[Stephanie P.]

Quote from @Stefan Hirniak:

Hi BP!

Hope everyone is doing really well. I am buying a new construction primary in May and hoping for some advice prior.

I have a relatively high DTI due to 7 other other conventional loans and my broker advised that a new investment prior to closing might impact my ability to close.

Our goal is to do an MTR on the new property and I understand we can’t count the income towards my ratios (since it won’t be on a tax return) which is my main concern.

I am wondering if buying the property in an LLC will help with the DTI issue. I know the load through the LLC will still have a personal guarantee since it's a SFH but wondering if this will show up when we go to close on the new primary.

Thanks a ton for the help and advice.

-stefan

Buying the property in an LLC will not help with the DTI issue for your conventional purchases because, as you said, the loan will have a personal guarantee. Doesn't matter if it's a "commercial property" or if it's titled in your business (the LLC) because the LLC is a passthrough entity and you're obligated on the note because of it.