Lending options to buy a second home

[Jennifer Bailey]

Hi All, 

My husband and I bought a home in Surfside, Texas last year which is a popular tourist town and Air B&B hot spot. 

We purchased the home using an owner occupancy loan and are currently living here. Our plan is to start renting it once we hit our 1 year commitment in a few months.

My question is.. What is the best route to go about buying a second home to do the same thing and how to offset our mortgage towards our DTI? Basically, purchase a new home then STR this one, rinse and repeat.

The one lender I spoke to said we need a 1 year lease signed to off-set the DTI. This will not work as we plan to do STR.

I've read that some lenders will allow you to go off a percentage of the appraisal amount with out having a signed lease. I understand the risk, however homes in this area earn $30-$50k a year just on Air B&B income and we do have good amount of savings to show.

After the DTI issue comes the down payment:

We are trying to avoid a huge down payment so if we could do another owner-occupancy loan for 1 year that would be ideal. Can we do another owner occupancy loan in the same area? 

Other option would be to buy a second home with 10% down. Then we would basically STR our current home, find an apartment back in the city, and STR here and there, considering we woulnd't need to wait 1 year. And yes, I know we still need to occupy it for a portion of the year.

Any suggestions would be helpful!

[Dustin Allen]

@Jennifer Bailey

“The one lender I spoke to…”  Change that part and you’ll find your solution. 

Go talk to at least 10 lenders and tell them what you are trying to do. You will find someone who will be able to do what you are trying to do.  If not, talk to more lenders.  There are so many different loan programs out there and many are specific to certain banks and mortgage companies. If you keep searching, you’ll find the one that fits your needs. Also, owner financing the second one is possible under the right circumstances. Best of luck.