Lots of equity, problems with HELOC debt:income

[Adam Byrne]

Hi BP!

I'm applying for a HELOC since i have a lot of equity in my primary residence that I could put to use BRRRRing properties. The problem is, I am a guarantor on my commercial properties' loans. According to a national bank, my debt to income ratio is out of their initial underwriting guidelines.

According to their algorithm, I'm a bad candidate for a HELOC since my personal income wouldn't cover the debt obligations I'm currently guaranteeing. However, the properties held in my LLC pay those mortgages and make a profit. I have substantial equity in the properties; in fact, our Current ratio (Assets/Liabilities) is 2:1 which should be considered very healthy.

Has anyone had this problem in the past? Is there something about real estate businesses that skew debt to income ratios in underwriting? Is there a better way to explain this to the underwriter or am I better off looking for an alternative to HELOC financing?

Thanks,

Adam