Refinancing based on rental property income?

Question

Hey everyone! Would anyone know if its possible to refinance based on the rental income of a residential property instead of your own job? is this even possible?

Juan Elias-Tovar · Answer

@Robert Grant @Upen Patel Thank you both for taking the time out of your day to reply to my question. Amazing advice! Its GREATLY appreciated! the knowledge I gain increases the confidence I need to make the next steps in my career to become a professional in this field.

Upen Patel · Answer

@Juan Elias-Tovar A residential loan is based on your credit, income and the property itself. No the income can consist of many parts - your income (W-2, 1099, self employed) and the rental income you generate from the subject property and any other properties you own.

So, theoretically, if you had enough rental income to meet the DTI ratio of a loan, then YES it can be done with rental income alone. Of course that is not likely, but it can be done.

If you go the portfolio route and are willing to pay a much higher rate, then you can get DSC (debt service coverage) based loans.

Robert Grant · Answer

Hi Juan, there is a Fico only program for buy and hold rentals, so no personal income/rental income/tax returns are ever required. Property just has to be tenant occupied. Rates are in the 7% range, no points and up to 70%LTV.

Juan Elias-Tovar · Answer

@Christian Abella Ok i can see that.  if the income from the property would provide enough to cover the mortgage payments that would look better for a lender. Thank you!

Juan Elias-Tovar · Answer

@Jason Bowles It makes sense. the more the better would be ideal. thanks for replying to this post!

Christian Abella · Answer

Hi Juan,

My understanding is the lender will look at both, the property's income as well as the borrower's. But if the property generates enough cash to cover the mortgage, the lender is willing to finance it. I have refinanced my own home and I am looking to do that with a rental property next year.