Seeking lender advice...Any hope for me qualifying?

Question

Hi,

Thanks in advance for any advice/input...

I'm wondering if/how I can qualify for conventional 30yr financing on rental property (1-4 units). Here is my situation:

*I'm a small business owner with no W-2 Income for the last 3 years. My wife had W-2 income, but it's going away in a couple months.

*I do have tax returns showing some personal income (though not much and not consistent) for the last 3 years.

*credit score around 830

*dti ratio of right around 50% (even with my meager income and not counting any income from my wife). Debt is from a mortgage on our primary residence and student loans.

I'm now in a situation to either reduce debt or increase my regular income (via paying cash for rentals/purchasing notes/something like that) to a point where my dti would be more attractive to lenders.  But, at this point, give my non-conventional financial situation, is it even worth trying to "fix" my dti? Even if it was good, would there be any bank who would possibly qualify me for a conventional loan?

If it is worth getting my dti lower, would it be better to reduce debt (and debt payments) or increase income (by purchasing rental property with cash, or something of that nature)?  If i do purchase rental property, is there a period of time I need to wait before a lender will consider any of that income? Or does this not matter?

Maybe there is something else I should be considering?

Any input is much appreciated!

Taylor Rees · Answer

@Chris Mason @Stephanie Potter  Thank you both for the words of encouragement! That's much better news than I was expecting.

Hubert J. DeVeau III · Answer

Taylor, self-employed bank statement loans are actually back in the market. They can qualify you for a new mortgage using monthly bank deposits to verify your income as opposed to using your tax returns.

Email me if you have anymore questions.

Stephanie P. · Answer

Hey Taylor

There are lots of bank statement programs out there that use deposits for income if you're self employed.  They will also take your wife's W2 income into consideration.  With your credit,you should qualify and the rates aren't that much worse than conventional.

Best of luck

Stephanie

Chris Mason · Answer

Hi Taylor,

Yup, def a chance, not hopeless. Fannie loans go for DTIs in the upper 40s now days. An investment property that cashflows should actually improve your DTI.