Regarding Mortgage Loan Credibility

[Phyllis Kelly]

TIA for all the advice and opinions, this forum is always so helpful.

I am wondering about acquiring additional loans going forward. I purchased my first rental property (duplex) in October of 2021. It was a house hack- I lived in one unit for a year and am now out. There were a lot of expenses for repairs and remodeling that I wrote off in my own personal taxes in 2021 and 2022. So much so that my AGI for 2022 was only $30,000. 

I'd like to apply for another loan this winter. My question is, will lenders mainly be looking at my total income, or will they be looking at my AGI from 2022 tax return? I'm wondering if that hurt my lending worthiness to write off all those expenses.

[Robin Simon]

Quote from @Phyllis Kelly:

TIA for all the advice and opinions, this forum is always so helpful.

I am wondering about acquiring additional loans going forward. I purchased my first rental property (duplex) in October of 2021. It was a house hack- I lived in one unit for a year and am now out. There were a lot of expenses for repairs and remodeling that I wrote off in my own personal taxes in 2021 and 2022. So much so that my AGI for 2022 was only $30,000. 

I'd like to apply for another loan this winter. My question is, will lenders mainly be looking at my total income, or will they be looking at my AGI from 2022 tax return? I'm wondering if that hurt my lending worthiness to write off all those expenses.

It depends on the type of lender you will be using. If you are going "conventional" (i.e. loans underwritten to Fannie/Freddi, quasi-gov agency standards) then there is really no judgment involved and its strictly rules-based so "worthiness" or "credibility" isn't really taken into account. They will look at tax returns and your DTI ratio for qualification. If you are hurt qualification wise in that regard, then you should look into "DSCR Loans" which are from private lenders typically and do not take into account DTI/tax returns/income and instead mostly look at your credit score and the property as a pure investment property. More here: https://www.biggerpockets.com/...