I have 20% to put down on rental property (duplex). High Income/Debt Ratio

3 Replies

I currently own a duplex and I have been renting 1 apartment and living in the other one for 4 years with great success dealing with tenants.

I want to expand and buy another duplex and rent it out.

I have 20% to put down but I can't get a conventional loan due to my high Income to debt ratio (because of my current mortgage).

What are my options?

I tried speaking to someone about no doc loan and was told I need 30% down and it will be 8% interest rate.

Have you owned the duplex for at least 2 years? If yes, have you post a positive return on your rental income? I would recommend looking for a local bank or credit union that does in house financing.  What it means is that they will normally have less strict underwriting guideline since they won't package the loan and sell it to Fannie Mae or Freddie Mac but instead keep it in house, hence the name.  My local bank would do that for me with 25% down and if income vs debt ratio is too high, then two years tax return will be required.  Interest fluctuates from 5.0 to 5.5% with no point and 20 years fixed with no early payoff penalty.  Definitely try that route, sure beats private lender or hard money.  Good luck.

Mina, do you mean that your debt to income is too high and that you have too much debt? This maybe a dumb question, but you worded it that your income to debt was too high so I initially read it as you make too much money to qualify. 

high income to debt ratio. Example 99%. 99% of my income goes to my debt. Lol I hope that clears it out.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here