How to Reach the 10 loan limit Debt to Income ratio

13 Replies

How is it possible for someone with not huge earnings, to reach the 10 loans mortgages when we take into consideration the debt to income ratio requirements? 

Buy heavy cash flowing rentals, 2+ year of landlord experience, and 6+ month cash reserves for the monthly payments.

Most banks use formulas to account for expenses (I think 30%).  

Originally posted by @Steve L. :

Buy heavy cash flowing rentals, 2+ year of landlord experience, and 6+ month cash reserves for the monthly payments.

Most banks use formulas to account for expenses (I think 30%).  

 So that means I will have to show in my taxes maximum cash flow??

If you have a debt service coverage ratio of 1.25 then the bank will view this property as breaking even and not count towards your debt in your debt to income ratio. So if your PITI is $1,000 a month and it rents for $1250 you are good to go on getting your next loan.

Originally posted by @Russell Brazil :

If you have a debt service coverage ratio of 1.25 then the bank will view this property as breaking even and not count towards your debt in your debt to income ratio. So if your PITI is $1,000 a month and it rents for $1250 you are good to go on getting your next loan.

 Which lenders do that? Because I just refinanced a property and because of debt to income restrictions I wasnt able to cashout up to 75% of my equity. I was able around 60%. But then again he didnt do manual underwriting...

That is the Fannin Mae guidelines on acquiring subsequent mortgages. A cash out refinance has different underwriting criteria than purchasing subsequent properties. I currently have 7 Fannin Mae loans and continue to acquire them with ease due to the dscr criteria for underwriting.

If you do a Google search for the Fannin Mae lending matrix, it will have a lot of the info for getting mortgages as well as the cash out refinance criteria. 

Originally posted by @Russell Brazil :

That is the Fannin Mae guidelines on acquiring subsequent mortgages. A cash out refinance has different underwriting criteria than purchasing subsequent properties. I currently have 7 Fannin Mae loans and continue to acquire them with ease due to the dscr criteria for underwriting.

If you do a Google search for the Fannin Mae lending matrix, it will have a lot of the info for getting mortgages as well as the cash out refinance criteria. 

 Is this what you are talking about?

@Pavlos Kasselouris Yes so you will see on that chart the credit score requirements, reserve fund requirements etc....I thought the DSCR was on there but it doesnt appear so. You do see on the chart though the max LTV on a cash out refinance if you are using an ARM is 60% LTV. So since you were limited to 60%, Im guessing you were getting an ARM.

Also to note these are Fannie Mae's guidelines. An individual banks requirements may be more strict, but if you shop around to just a few banks or just use a mortgage broker, there is a very high likelihood you will get someone willing to lend on Fannies minimum requirements.

@Pavlos Kasselouris  
As @Russell Brazil There are limitations as to how much of LTV cash-out refi you can do on an investment property. The LTV is a higher if you are looking to do a rate-term refi. Also, as you have already realized the LTV for a purchase investment loan and higher then when you are doing a refi.

An another thing to keep in mind is when you have 5+ conventional loans, you can no longer do a cash-out refi on an investment property. You can only do a rate-term refi.

Upen Patel, Mortgage Banker

Federal NMLS# 1374243

You could find an opportunity to do refi with cash out with small local bank which keeps mortgages. It may have different guidelines

Originally posted by @Jane A. :

You could find an opportunity to do refi with cash out with small local bank which keeps mortgages. It may have different guidelines

These are Fannie/Freddie guidelines that everyone follows. Unless the small local bank is going to keep the residential loan on their portfolio and take on the additional risk.

Upen Patel, Mortgage Banker

Federal NMLS# 1374243

I am Self employed with a good income but lots of deductions so I often run into these issues with many of the larger banks. I found a small local bank that will write as many loans as I want in NJ as long as my credit is over 725, the same reserve requiremt discussed are met and the property is rented at closing. Total peppery expenses can not exceed 75% of the gross rent.  This bank holds all their loans so they are not concerned with fitting you into a mold to sell it.  They just want to make sure you can pay. W

I'm in underwriting for a loan on a property in NC with a contact I met on BP.  He works in most states and his bank seems to be investor friendly.  @Jerry Padilla we are a ways away from closing but so far it looks like it could turn out to be a beneficial relationship. Check him out

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