All Forum Posts by: Trevor Alexander

For an FHA loan, most Lenders will say you need 24 months commission income minimum to qualify. But the FHA guidelines technically say you can do 12 months average with a 2 year work history. Might be hard finding a Lender willing to do this, though.

For a Conventional loan, a Lender with no overlays can qualify you with 12 months commission income with other positive factors (low DTI, high credit, higher down payment, etc). Fannie prefers 24 months, but 12-24 months is still acceptable. The Lender may just take your 12 months and average it over 24 months to be conservative.

However, Conventional will require 25% down on a multi-unit purchase.

Another option is to have your employer switch you to salaried for now - you’ll qualify right away with 30 days stubs on your salaried income.

Beyond that, like the other folks said - you’ll need to go non QM.

Hope that helps. Feel free to shoot me a message if you have any questions.

If you put 10% or more down, your FHA MIP will expire in 11 years. Yes, the other way to get rid of it is to refinance out of an FHA loan into a Conventional loan.

Oh, I totally get that ha! But you wouldn't have to house hack if you just purchased another SFR to live in for 3.5-5% down rather than putting up at least 15% at a rate of probably 1.5% higher -- rates on NOO loans are higher than OO loans. Just my opinion of course.

A HELOC really isn't a bad option. Just include your hypothetical P/I payments in your cash flow calc. on the new rental purchase and see how the numbers look.

Hi Kenneth -

Welcome to the forum. Well, the biggest con of a HELOC compared to if you were to split funds needed from another investor, would be that it's a second mortgage that you have to pay back. On the other hand, going into a deal with another person will hurt your cash flow by the need to split it. If you do go in on a deal with someone, I would just advise to be 100% positive it's a good partnership.

Personally, (and if you have the flexibility), I like the idea of converting your condo into a rental and purchasing another 1-4 unit owner-occupied property with a 3.5% down FHA loan, or a SFR property with a 5% down Conventional loan. That'll be the option to purchase another investment with the least amount of money.

If you purchase a NOO, you'll need at least 15% down on a SFR (with PMI), or 25% down on a multi-unit.

If you can access enough equity, the numbers work, and you would rather not move, taking out a HELOC isn't a bad move. Just remember it's a variable rate, and HELOC's typically aren't the best to borrower large sums out of or to hold on to long-term.

Hope this helps!

What's the particular issue you don't want/cant have bank financing?

Your other options will be seller financing or private loan.

Hi Michael - 

Most often from what I see is because of all the write-offs on their tax returns. There is a calculation that Lenders have to use on the individuals Schedule E, and there are some addbacks allowed with depreciation being the big one that I've seen save investors. But, for the most part...the net profit on the Schedule E is what's being looked at to determine income. If that's a loss (because they don't want to pay taxes, which of course who doesn't), then on paper then don't have any positive income from those properties, therefore have a high DTI according to the Lender. In reality, their DTI is lower, but if the taxes aren't being paid on it, we can't use it.

Short answer to continue qualifying for Conventional loans...report more net profit and pay more taxes on the REO schedules.

There's only one way to improve DTI on a loan application - add more income or decrease the outgoing debt. Adding income would include adding a second borrower, or increasing the net profit reported on their schedule E. Outside of that, you'd be looking at private lending or DSCR loans.

Hi Nicole - 

Full-time college or trade school counts as employment history for FHA and Conventional loans. You would supply your school transcripts in lieu of two years employment history. You would still need a full-time job currently, and if you have that coupled with the college transcripts you are good to go.

Purchasing a multi-unit with an FHA loan is a great option. You can put as little as 3.5% down, and you can use the projected rents as your income to offset the mortgage payment as well.

Feel free to shoot me a message if you have any other questions on how to pursue this. Happy to help!

You've definitely got options. I like the option of converting your primary to a rental with that kind of cash flow. That's a great starting point into the investing game. Since you have the flexibility, I would house hack a multi-unit with an FHA loan while saving up 5% for your next SFR - such as the 3 bed you mentioned.

You don't necessarily NEED to tap into the equity if you can get into another potential investment property for 3.5% down, and then 5% down the road.

Good luck on your journey!

Hi Tyler-

In the simplest terms, you'll just need to refinance into a Conventional loan before the 5-year balloon is up.

You'll need to qualify for the home on a Refinance the same as you would as a purchase. You'll need to have enough stable income & solid credit. May need 6 months reserves in the bank as well. The house will get a standard appraisal to determine value.

You can go up to 80% LTV on a cash-out refinance. So what this means is if you are below that equity position, and after accounting for paying off the owner, and closing costs, you can take out some cash up to 80% LTV if you wish.

Hope this helps and good luck!

Need some more info on this....as Theresa said, this would be considered identity theft if it someone actually got a mortgage in your name. How did they do this in your name?