I will have 65k to put down as a down payment, but DTI is high.

3 Replies

Hello,

I am interested in buying a second property to rent out. My husband and I own one property that we are currently renting out, and we are living with his in-laws to save money for another down payment for a house. So far, we have about 40k saved and planning to have about 65k saved by the end of the year. We aren't looking until the end of the year to purchase a second home and we are looking around the 200k range. Our current mortgage right now is $750 a month and we are renting it out for $1700. We have no other expenses except car insurance. We both only work part-time so our DTI will be pretty high when we apply for a second mortgage. If I calculated it right it should be around 50% if we get a second property with an $1100 mortgage. What types of loans are available for us, if any?

@Tiffany Long in some cases you can get approval up to 50% DTI - are you including 75% of the rent of the subject property when calculating DTI? in some cases you can use the rent on the subject property.

Another option is a local back who may be more interested in the debt coverage on the subject rather than the DTI - down side is shorter term loans, little higher rate.

@Tiffany Long   you can use the net rental income that is calculated off of your taxes for your first property. ( you can factor back in the depreciation, taxes and insurance - as they are in your mortgage payment) some expenses will count against you and some you can argue are a one time expense when it comes to factoring expenses against the income. For your second property you can use 75 percent of the potential rental income. 

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