Does my commercial lender need to know about my private loan?

Question

Hello!

I have a number of homes in my name and one investment property with a private money loan that’s in my LLC where my LLC is debtor.

If I’m looking to purchase a home with fha financing, do I need to disclose my private loan note?

Jerry Padilla · Answer

@Rich Emery - If you don't have a separate business tax return for this LLC, then the private loan note will need to be disclosed to the lender. However, if the LLC is part of a partnership or S corp business returns, all properties would be treated as a business versus rental income calculation. Those properties would not need to be disclosed on the application. Ultimately if you have the property on your individual tax returns via Schedule E, this would still make you liable for all debts. So if the property title is your personal name or LLC, it doesn't matter in the underwriter's eyes for the analysis of DTI. What matters to an underwriter is the liability on a business return or individual returns.

Katherine Blazer · Answer

It's probably on your taxes, so they will know about it anyway.

Jay Hurst · Answer

@Rich Emery Did you give a personal guarantee on the loan to the LLC?

Does my commercial lender need to know about my private loan?

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