All Forum Posts by: Eric Johnson

Absolute congrats on the execution of this !!

This is a very interesting take & curious to see where it goes. This is essentially taking an aggregate analysis of a borrowers APR & comparing the threshold based on a model of a "on time paying customer." This means, no single tradeline can throw your chance of getting qualified out the window (because of surpassing a specific DTI threshold).

I will need to let this ruminate a bit a more. 

Conventional 10%. Only other way is to live in it with FHA @ 3.50% down, alternatively a FNMA or FHLMC Homeready/Homepossible

 My friend, this is well before COVID, however, the glory is the same. 

Help more investors get financed :) pretty self explanatory. But I'm good at what I do, so I try an help the best I can. GL to everyone in 2021. This message is now your good luck symbol. 

Michael, 

DTI is your total monthly obligations (including subject property PITI payment) divided into your gross monthly income. Conventional lenders have different DTI thresholds. Common is 43% others go up to 57% (FHA for ex).

DCR is the subject property PITI payment divided into the underwritten market rent.

If the PITI payment on a rental deal is $1,000 and your monthly rent is $1,200, your DCR is 1.20x.

1.20x is pretty narrow, but passable through our underwriting. We do 30 year amortization, and our rental rates tend to be around 5.50%. 

Ideally, you'd want to see deals have a 1.25x DCR or higher if you want to be safe. DCR is also irrelevant for you calculating your investment returns for personal reasons. DCR is simply a good ratio to determine if an asset will adequately qualify for financing and whether or not it would be reasonable to expect it to be financed.

Hope this helps & GL. 

Hi Cherie, 

Yes, going conventional when you have new rental properties on credit report is always an issue. This is because when your DTI is calculated, it will include the payments on the investment property.

One option is to go longterm commercial financing (for NOO 1-4 unit investment rented investment properties). These notes are frequently not reported to the credit agencies and could free up some DTI bandwidth.

Hope this helps 

You can if you want, but 3.25% is still good and you will still have transaction costs. I guess it depends if you can get an offer that makes it worth it.

3.25% at no points is worth keeping

This is a fix and refi deal, correct? Happy to assist. Usually we are below 10.50% even if you're a first time investor. Probably more like 9% & 2 points. hope this helps. Feel free to DM me or email 

Brian, happy to be a resource. feel free to dM if you'd like