So, I bought a new primary residence a year and a half ago with cash. I'd like to take out a LOC on it to use for fix & flips and/or buy & hold acquisitions. Problem is, I don't have any W2 income since I don't have to work & I prefer to spend my days with my two young children. My wife's W2 income is insufficient & the banks won't consider the capital gains & other variable investment income that covers most of our living expenses, so the DTI kills the loan:
Bank: "So, how do you plan to make the payments on this LOC?"
Me: "With the income I'll generate using the money you lend to me."
Bank: "Take a hike."
Of course the same issue applies to a cash-out refi. Are there any other options for borrowing money against our home? We have great credit and good positive net worth...
You can reduce your tax deductions, thus increasing your taxable income. It may mean paying more taxes, but making your borrowing situation easier. Many self employed people have to do this.
If at all possible, borrow from friends or family to get money out of your home. Hard money lenders, that don't need your income to qualify, will not lend on your primary residence, and bank lenders that will lend on your primary residence will need your income to qualify you. Or, like @Russell Brazil mentioned, increase your taxable income on paper so you can get the loan you want.