Necessary Monthly Income to Secure a $250,000 mortgage

[Adam Quinlan]

Hi!

I am looking to make my first investment with a live-in multi-family in Attleboro, MA.  I am 21 years old and self-employed.   I was rejected by Norwood Bank last year as my 2015 & 2016 2-year monthly average income was only about $1,100 as I was a full-time student in 2015.  

I am ready to file my 2017 taxes which will give me a $3,791 2016-2017 monthly average income.  I have about $13,000 in business expenses that I am considering deferring, depreciating, or just not reporting altogether if need be in order to inflate my monthly income.  

I have $45,000 for a down-payment. 782 credit score. Zero debt. I am looking to use Mass Housing or FHA to purchase a ~$250,000 duplex or ~$325,000 triplex in Attleboro, MA. Rents range from $800-$1,200. It is my understanding that I can include 75% of the rent if occupied and 50% of the estimated rent if unoccupied. Again, my 2-year monthly income right now is $3,791, but if I under report expenses I can get it to over $4,200.

My bank refuses to give me a hard number on what my monthly income needs to be and I do not want to wait another year to make this purchase.  If anyone here is able to provide me with a breakdown of my numbers that would be greatly appreciated as I am super new to all of this!!

If you need more information feel free to message me.  I was a little unsure of the forum etiquette in regards to posting your income.  

Thank you so much!

Adam

[Brie Schmidt]

@Adam Quinlan -You need to understand DTI ratios.

https://www.biggerpockets.com/search/wordpress?ter...

Assuming you do not have any monthly bills and you are looking at a FHA duplex that the other side rents for $1k a month it will be as follows:

Monthly Income = $3,791

Monthly Rent = $750 (75% of current rents)

Total Monthly Income = $4,541

Multiple by 45% = $2,043

Taxes and Insurance = $275 (I looked on redfin in your town and used the average for duplexes under $250k)

Left for P&I payment = $1768

Interest rates depend on your credit but a good ballpark for FHA is your payment will be $575 a month (with PMI) for every $100k you finance. So if your DTI will allow a payment of $1,768 that would be equal to $307k in loan value