good credit, low DTI, still getting declined for personal loans

[Albert L.]

Hey folks, 

We closed on our first property 30 days ago using a conventional, 25% down 30 yr loan from a local bank and have been applying to get a personal loan to potential BRRRR or flip on another property with no success.

It's been a humbling experience but honestly a bit surprising too given my high credit scores (above 740's), low DTI (roughly 28%) and stable, high net income from W2's.

We've tried SoFi and Lightstream and are considering Wells Fargo next, but wanted to see if there's a bigger underlying issue we're missing here before continuing forward with our applications. 

Question - how does my recent mortgage play a factor in securing a personal loan? (if at all)? What am I missing here give the typical factors when strong credit score / low DTI are there?

Thanks for reading and helping a newbie out! 

-Albert

[Andrew Postell]

@Albert L. this is the main reason I wish people would do less down initially.  Once you spend that money it's kind of hard to get it back.  For anyone else who is reading this a Fannie/Freddie loan can do a 15% down loan.  That can be a big difference in the amount of cash you have left over after you purchase a property.

Likewise though, the whole reason why BRRRR is such a great concept is because, in theory, you can come out of pocket with $0! So if your acquisition loan can lend you up to 75% of the ARV (which is pretty standard) and you BUY AND REHAB your property under 75%, you would then refinance with your conventional lender (who can go up to 85%) and then do it all over again. I say "in theory" because there's always something you come out of pocket...utilities, loan payments, etc. But even a few thousand is an ENORMOUS difference then putting down 25% on a home that is purchased a full market value.

My recommendation is to try to find a property that fits that BRRRR method. It is harder to find a property that way but it is certainly possible. In our market you have to find off market properties and often self-source your leads.

Hope this helps!