Debt to income ratio for short term rental loan?

[Kale Leavitt]

I am new to real estate investing and really intrigued by the short term rental strategy. I recently sold my first business and have a good chunk to invest in my first property. However, I found by talking to a lender that potential rental income cannot be used in debt to income to help qualify for the loan in short term rentals, only in long term rentals. Has anyone found a way around this? With a new property my debt to income increases to around 55% without the income from a short term rental property.

Thanks in advance!

[Luke Carl]

That is true. But look at it a different way. As long as the loan isn't for a primary or a second home, that same projected rent you already mentioned can be used in favor of your DTI.

The appraiser will do a market rent assessment. The number will of course be based off what it would do with a lease, even though you’re not putting a lease on it. You’ll likely be making way mode than if it were an LTR but that doesn’t matter to the bank. 

One of the beautiful things about STR is the 10% down second home loan. As of April 2019 the second home rider allows you to Airbnb your second home with no implications. This allows you to get into the real estate game for not a only a small chunk of change, but STR SHOULD make more than LTR so it's a win win. However, if DTI is an issue you're looking at an Investment loan -which can be had for a minimum of 15% down (75% LTV)

If you just learned more from me than you have from your lender..... you need a new lender. Just keep calling until you find someone that has the answers. 

Good luck let me know if you have any more questions :) 

Typed on an iPhone.