Investor · Saint Louis, MO · Member since 2016 · 970 posts · 1k+ votes
Hey All!
Just a quick question. When applying for a new loan, do mortgage lenders or banks look at the LTV or how much you forked over as a downpayment on your other rentals/primary or do they just care about Monthly payments and total Loan Amount?
In general we do not care about LTV of other properties. I've done deals where they put some other property underwater to come up with the down payment on the one we are buying.
For a long while departing residence rental income needed to be associated with 25% equity, but that has gone away at the Agency level.
For folks committing occupancy fraud (which I'm sure you aren't, but there are lurkers reading this too) LTV of other recently purchased properties can be a give-away. For example if we're doing 5% down as an owner occupant, and underwriter sees that you just purchased two other properties putting 5% down, that starts to look like fraud.
Rental Property Investor · Loretto, TN · Member since 2016 · 44 posts · 27 votes
9y
Mortgage lenders / banks will look at the value of the property to determine the max amount of the loan (the LTV). The max for your first few loans is 75% of value typically for rental properties. Whether they give you a loan or not depends on several factors including your debt-to-income ratio. Some of any existing rental income can be counted toward your income. The down payments on your existing properties don't really matter, except that the down payments affects your total debt which affects your debt-to-income ratio.
In general we do not care about LTV of other properties. I've done deals where they put some other property underwater to come up with the down payment on the one we are buying.
For a long while departing residence rental income needed to be associated with 25% equity, but that has gone away at the Agency level.
For folks committing occupancy fraud (which I'm sure you aren't, but there are lurkers reading this too) LTV of other recently purchased properties can be a give-away. For example if we're doing 5% down as an owner occupant, and underwriter sees that you just purchased two other properties putting 5% down, that starts to look like fraud.
Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
9y
For a new Commercial Loan, DTI is ignored and the new property DSCR is the tell all metric.
Income from your other B&H properties(MFUs), it's purely income as the Sch-E washes away expenses including mortgages. SFRs will be viewed as secondary homes and there better be a cash flow
Hi Chris! thanks for the reponse. On that note, since you are a lender. How long do you have to be on a 5% down property as a owner before you rent it out. 6 months? It just seems like an easy rinse and repeat way to work if you are a flexible investor.
Hi Chris! thanks for the reponse. On that note, since you are a lender. How long do you have to be on a 5% down property as a owner before you rent it out. 6 months? It just seems like an easy rinse and repeat way to work if you are a flexible investor.
Hi David,
If your family can handle the nomadic lifestyle, migrations to a new 95% LTV owner occupied primary residence can occur as soon as one year. So, annual migration of the Zheng family. :)