Refinancing with no W-2 income
Member since 2023 · 327 posts · 63 votes
Refinancing with no W-2 income
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Daniel ChristopherBusiness Member
Lender · Miami, FL · Member since 2020 · 793 posts · 96 votesQuote from @Anthony Freeman:
What are some solutions that you have found?
As Brayden mentioned, would be tough to refinance if this is a primary home. If it's an investment property DSCR would be the go to route here.
If it's an investment property do you operate it as a Long Term Rental or Short Term Rental?
65 Replies
- Member since 2023 · 327 posts · 63 votes3y
Quote from @Donna Lazar:
Everyone saying DSCR but not focusing on the benefit which is that it has the option of amortizing or low interest-only payments. I would say DSCR is an option or getting a hard money refi. It all depends on what the goal is, if you want to sell the property or continue renting. If you want to rehab and sell, hard money. If you want to rent out, DSCR. Soon as you get a W2 income, after few months you can refi conventionally, although that really doesn't matter at this point as DSCR rates are similar as conventional rates and they might even be more attractive due to the benefit being interest only. Last thing to mention, credit is important and all investors look at it (aside from location of property and LTV) to determine risk and therefore rate.
I am looking into that step now because if the terms are not better than a conventional loan I will have to look into refinancing again once meet the criteria in this case.
- Member since 2023 · 327 posts · 63 votes3y
Quote from @David M.:
Well... Do you have any reportable income? You do realize that you, as well as many others, can obtain financing with 1099 income, for example? Or, are you already retired in some way and no longer working and independently wealthy?
Everybody "always" jumps to DSCR and asset based loans, etc.. But they are more expensive generally than getting a conforming loan. Of course, better for those lenders wanting to sell you one...
Good luck.
I have found evidence of low term dscr loans recently.
- Member since 2023 · 327 posts · 63 votes3yMy business is real estate investing. I do not have an outside entity.
Quote from @Muhammad Patel:
Do you have a business? Are you filling schedule C or K1. If so this could be used a period of income. If not then the non-qm options might help.
- Member since 2023 · 327 posts · 63 votes3y
Quote from @Neil Sherry:
@Anthony Freeman there are many NO INCOME VERIFICATION real estate investor mortgages available .
Is there anyway you can guide me in the direction of lenders you know personally that have actually lent on no income verification terms.
- Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes3y
Quote from @Anthony Freeman:
My business is real estate investing. I do not have an outside entity.Quote from @Muhammad Patel:
Do you have a business? Are you filling schedule C or K1. If so this could be used a period of income. If not then the non-qm options might help.
I never had W-2 income - I have 2 mortgages. Lender will take your sch.C, E or K-1 - you just provide two years of tax return.
you'll need to show reserves, low DTI ratio and 20% down for investment property.
if you didn't report your income on your tax return - tests another problem ….but DSCR loan will cost you much more than conventional - Member since 2023 · 327 posts · 63 votes3y
Quote from @Irina Belkofer:
Quote from @Anthony Freeman:
My business is real estate investing. I do not have an outside entity.Quote from @Muhammad Patel:
Do you have a business? Are you filling schedule C or K1. If so this could be used a period of income. If not then the non-qm options might help.
I never had W-2 income - I have 2 mortgages. Lender will take your sch.C, E or K-1 - you just provide two years of tax return.
you'll need to show reserves, low DTI ratio and 20% down for investment property.
if you didn't report your income on your tax return - tests another problem ….but DSCR loan will cost you much more than conventionalHow much experience do you have with Dscr loans?
- Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes3y
I don’t - they are too expensive for me. My clients did - investors take whatever they can get.
one of my clients financed his factory with such loan…shortly after there started the Great Recession. Bank was checking his financials every year but in 2009 they say to pay it off or refinance - within a month. It was $2M LoanHe went to another bank and they refinanced him and he closed all accounts with the first bank. He still own the factory and the building free and clear and don’t want any financing any more.
That's one major hazard of DSCR loans - bank can call it off any time if they don't like your P&L etc
- 3yJohn MorganPro MemberRental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
Go with DSCR lenders. They don't care if you have a W2. If you have a pulse and it cash flows, they'll give you a cash out refi or a new loan. lol
- Member since 2023 · 327 posts · 63 votes3yWhat rates have you seen on these loans?
Quote from @John Morgan:
Go with DSCR lenders. They don't care if you have a W2. If you have a pulse and it cash flows, they'll give you a cash out refi or a new loan. lol
- Member since 2023 · 327 posts · 63 votes3y
Quote from @Irina Belkofer:
I don’t - they are too expensive for me. My clients did - investors take whatever they can get.
one of my clients financed his factory with such loan…shortly after there started the Great Recession. Bank was checking his financials every year but in 2009 they say to pay it off or refinance - within a month. It was $2M LoanHe went to another bank and they refinanced him and he closed all accounts with the first bank. He still own the factory and the building free and clear and don’t want any financing any more.
That's one major hazard of DSCR loans - bank can call it off any time if they don't like your P&L etc
We would have to make sure our income is proper then. Calling a loan at anytime does not sit right with me.
- Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes3y
@Anthony Freeman whole my business was built on credit, I was buying houses on 0% credit cards, paying them off and never could refinance them. So, eventually, I just get more income from 1099 and started working on being fundable.
My own HELOC helped for downpayment and the only time I could get rental mortgage, was in 2021 when I had highest income more than the price of the rental. They still discounted my rental income which was from 11 rents every month.
it is very hard to get a mortgage as self employed but it’s possible. W-2 is much better though…oh well - Member since 2022 · 15 posts · 4 votes3y
Quote from @Anthony Freeman:
My business is real estate investing. I do not have an outside entity.Quote from @Muhammad Patel:
Do you have a business? Are you filling schedule C or K1. If so this could be used a period of income. If not then the non-qm options might help.
- Member since 2022 · 15 posts · 4 votes3y
Quote from @Muhammad Patel:
Quote from @Anthony Freeman:
My business is real estate investing. I do not have an outside entity.Quote from @Muhammad Patel:
Do you have a business? Are you filling schedule C or K1. If so this could be used a period of income. If not then the non-qm options might help.
- Member since 2023 · 327 posts · 63 votes3y
One thing that I am evoked to mention is your debt to income ratio. After using those credit cards for the purchase did your acquired debt ever enter the conversation at the time of refinance?
- Member since 2023 · 327 posts · 63 votes3y
- 3yRobin SimonBusiness MemberLender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
Quote from @Anthony Freeman:
What are some solutions that you have found?
you are looking for a DSCR Loan - all the needed info here!:
DSCR Loans: What Are They And How To Get The Best Terms
https://www.biggerpockets.com/...
DSCR Loans: How To Use Pro Strategies To Save More And Make Morehttps://www.biggerpockets.com/...
Multifamily DSCR Loans: A New High-Impact Loan Option For Real Estate Investors?https://www.biggerpockets.com/...
12 Frequently Asked Questions (And Answers) About DSCR Loanshttps://www.biggerpockets.com/...
8 More Commonly Asked Questions and Answers to DSCR Loans
https://www.biggerpockets.com/blog/eight-questions-and-answe...
What Documents Do You Need for a DSCR Loan?
https://www.biggerpockets.com/blog/what-documents-do-you-nee...
BRRRR Loans: What Are the Options, and How Do DSCR Loans Stack Up?
https://www.biggerpockets.com/blog/brrrr-loans-what-are-the-...
Harpoon Capital514 Reviews - Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes3yI assume you ask me because people never finance real estate with credit cards.
Quote from @Anthony Freeman:
One thing that I am evoked to mention is your debt to income ratio. After using those credit cards for the purchase did your acquired debt ever enter the conversation at the time of refinance?
So, the catch here is once you deposit checks ftom credit cards for 12-18 months with 0% (and they have 3-5% fees upfront), your FICO score will drop 100-120 points till you pay them all off.
business credit cards are not shown on your personal report - these are exceptions
I was buying houses back then for $8-13K and fixing them up for $7-10K, renting for $795-925/mo.
my returns were high but whole year you can’t buy anything else this way…..after tenants paid off these credit cards - it’s starting over.
‘During that time you’ll never get good offers for credit from credit cards, banks - anyone.
So, basicly, you have to make really strict plan of payments during this time and pay it off before they start incurring 29.9%
I created this game since I came to this country - the next day after I’ve got my SSN…..still there is nothing works like excellent credit.
Banks discount my rental income, my self employed income, even my investments in stock market - but never dismiss my almost 850 FICO. - Member since 2023 · 327 posts · 63 votes3y
Quote from @Irina Belkofer:
I assume you ask me because people never finance real estate with credit cards.Quote from @Anthony Freeman:
One thing that I am evoked to mention is your debt to income ratio. After using those credit cards for the purchase did your acquired debt ever enter the conversation at the time of refinance?
So, the catch here is once you deposit checks ftom credit cards for 12-18 months with 0% (and they have 3-5% fees upfront), your FICO score will drop 100-120 points till you pay them all off.
business credit cards are not shown on your personal report - these are exceptions
I was buying houses back then for $8-13K and fixing them up for $7-10K, renting for $795-925/mo.
my returns were high but whole year you can’t buy anything else this way…..after tenants paid off these credit cards - it’s starting over.
‘During that time you’ll never get good offers for credit from credit cards, banks - anyone.
So, basicly, you have to make really strict plan of payments during this time and pay it off before they start incurring 29.9%
I created this game since I came to this country - the next day after I’ve got my SSN…..still there is nothing works like excellent credit.
Banks discount my rental income, my self employed income, even my investments in stock market - but never dismiss my almost 850 FICO.I applaud you for your creativity and your discipline. 850 fico is amazing you must get approved for all types of things. Did you build that by simply paying off your credit cards that you used to purchase the properties?
- Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes3y
@Anthony Freeman not only - it took me quite few years to build it.
Yes, I never missed a payment in my life - even if I had to pay high interest on the balances for few months.
Then, you have to have 4 credit lines in perfect standing for 7 years…obviously, no collections or anything derogatory. Income doesn’t matter but limit does matter - and they won’t increase your limits with $12-15K I made back then. So I declared higher that real income - and it was Magic - in a year my income increased to that amount I told to c/c.
The main rule to remember - don’t apply to more than 1-2 cards in 6 months…when you need money - nobody will give you good deal. Credit cards and lenders start sending you good offers (0% for 21 mo with 2% fees on business credit card with limit if $40K) when your score is higher than 780 and no visible debts on your report.
I guard my credit with all I have - it’s much better than money. All my money I’m making - it’s on credit
- Member since 2023 · 327 posts · 63 votes3y
Quote from @Drew Harris:
Quote from @Anthony Freeman:
Quote from @Neil Sherry:
@Anthony Freeman there are many NO INCOME VERIFICATION real estate investor mortgages available .
Is there anyway you can guide me in the direction of lenders you know personally that have actually lent on no income verification terms.
Hey Anthony, depending on your state I can help you with that. With the DSCR Cash out refi your credit score and DSCR ratio (gross rent divided by the PITI).
620-659 65% cash-out
660-699 70% cash-out
700+ 75% cash-out
Do you service Ohio?
- Member since 2023 · 327 posts · 63 votes3y
Quote from @Irina Belkofer:
@Anthony Freeman not only - it took me quite few years to build it.
Yes, I never missed a payment in my life - even if I had to pay high interest on the balances for few months.
Then, you have to have 4 credit lines in perfect standing for 7 years…obviously, no collections or anything derogatory. Income doesn’t matter but limit does matter - and they won’t increase your limits with $12-15K I made back then. So I declared higher that real income - and it was Magic - in a year my income increased to that amount I told to c/c.
The main rule to remember - don’t apply to more than 1-2 cards in 6 months…when you need money - nobody will give you good deal. Credit cards and lenders start sending you good offers (0% for 21 mo with 2% fees on business credit card with limit if $40K) when your score is higher than 780 and no visible debts on your report.
I guard my credit with all I have - it’s much better than money. All my money I’m making - it’s on credit
I have to get an 850 credit score.
- Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes3y
I’ve never get 850 - I’m too cheap to pay %% on car loan and you need mix of installment and revolving debt - so creditors could see your payment pattern.
My highest was 820 but higher than 760 is basically pointless - you’ll have the best offers possible
- Member since 2023 · 327 posts · 63 votes3y
Quote from @Irina Belkofer:
I’ve never get 850 - I’m too cheap to pay %% on car loan and you need mix of installment and revolving debt - so creditors could see your payment pattern.
My highest was 820 but higher than 760 is basically pointless - you’ll have the best offers possible
Do you have business credit?
- Member since 2021 · 30 posts · 12 votes3y
Quote from @Anthony Freeman:
Quote from @Drew Harris:
Quote from @Anthony Freeman:
Quote from @Neil Sherry:
@Anthony Freeman there are many NO INCOME VERIFICATION real estate investor mortgages available .
Is there anyway you can guide me in the direction of lenders you know personally that have actually lent on no income verification terms.
Hey Anthony, depending on your state I can help you with that. With the DSCR Cash out refi your credit score and DSCR ratio (gross rent divided by the PITI).
620-659 65% cash-out
660-699 70% cash-out
700+ 75% cash-out
Do you service Ohio?
Yes I do sir.
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