I want to buy mulit unit building like a 3,4 flat. On a conventional loan from the bank 20% down i can get approved for 150k , and in and around chicago that dont buy you anything buy a beat-down property.
Is there a different type of loan that I can get? I want to buy a 3 flat for about 300k, and it already has renters in all the units. How do I get beyond the 43% DTI rule of the conventional loans?
There are other types of loans, but the terms are roughly the same. 20% is about as low as you can go.
Once you have two years experience landlording the rental income will count toward your DTI. Good rentals help your DTI. The calculation is more complicated once you have rentals. For existing rentals a lender will look at actuals from your tax return. For a new property they use a rule of thumb "net rental income = 75%*rent - PITI". If your net rental income, including all deductions but without depreciation is positive, it adds to your other income and helps your DTI. If its negative it adds to your debt payments and hurts DTI.
Jon Holdman, Flying Phoenix LLC
You saved me a bunch of time!
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