Can I get a mortgage to buy townhouse in Brooklyn, NY?

Question

I'm planning to buy a third house. It would be a townhouse in Brooklyn, NY. My budget is around $1.7 to $2.1 Million for 1-2 family house. I wouldn't be renting any of it.

I currently have an apartment in Brooklyn, NY (my primary residence) valued at around $900K with a remaining $240k Mortgage balance. $3200 Monthly mortgage payment, I also pay $500 a month HOA fee

I also bought my second home in NJ two years ago for $371k (valed at 430K Now) with a remaining $280K Mortgage balance. $2300 a month payment

I'm planning to rent out my (primary residence) the Brooklyn apartment and buy a bigger new house as I'm planning on having kids. My income is $300K a year, my wife started a job in January and makes $100K. We don't have any debt except for the two mortgages mentioned above. We also have approx 300K retirement accounts which I'm not planning to use. We can put 20% down and our credit score is above 800.

Can you please let me know what my options are to get a mortgage?

Income $400K
1st Mortgage payment: $3200 + $500 housing fee
2nd Mortgage payment: $2300

Zach Edelman · Answer

@Henry Ko contact me at eight four seven- four seven one - six three eight four. I am an LO at a DSCR lender known as Easy Street Capital. I do lending for refinances (both rate-term and cash-out) and acquisitions for cash-flowing residential investment properties like the one you are describing above. We don't do any income verification or tax verification, so your DTI being on the cusp would be an issue. Looking forward to hearing from you!

Eric Hajdu · Answer

@Henry KoCongratulations on planning your third purchase, you should be ok to do a traditional 30yr fixed on an approx. $2mil 2 fam in Brooklyn. I would strongly consider a duplex or triplex over a rental unit. The lender will like that you’ll have rental income from the new purchase even if you don’t plan on renting it out.I just purchased a multi family in BK last week and the lenders don’t care too much about how much equity you have in other properties, it really comes down to tax returns and showing robust income.

Jason Lee · Answer

It seems like you could be borderline. For the most part, lenders are only going to look at your housing debt-to-income. Unless you have a signed lease on your Brooklyn apartment, they'll add those carrying costs to your new total. You'd be at about 40% DTI on a $2MM purchase. If you're going to start shopping around for a townhouse you'll need a pre-approval anyways so reach out to a banker/mortgage broker now and they'll tell you exactly what's possible. Let me know if you need any referrals.

Alex Hunt · Answer

The above comments are not wrong but if you work with a non QM lender, they will not consider DTI or w2. With $300k in retirement that would almost entirely meet the minimum reserve amount for a $2 million purchase. Personally do a lot of lending in the Tri- state area and when looking at locations- the DSCR is what is important. Would you be open to refinancing the 1 you are going to change into a rental, moving that to commercial would free up alot in DTI if you are going that route.

Brandon Cohen · Answer

DTI would be on the cusp! Sign a lease on one of your properties or consider a two or three family.

Mackenzie Grate · Answer

I have a couple lenders I could recommend. For some lenders you will be on the border with your DTI income, others are more flexible. It does help to have a signed lease on your apartment that you plan to rent out, but long story short, this entirely doable. There are a lot of moving parts, and it will take some persistence, but it can be done. :)I have some people I can put you in contact with if you are interested and I'm happy to help as well. I'm a realtor too, but I live in Brooklyn and I have a strong network of realtors who can help you out with this. DM if you want me to put you in contact.Good luck! I'm rooting for you!

Dave Skow · Answer

@Henry Ko- thanks - locate a lender and get pre approved for the 2.1 mill hhypothetical price ..the pre approval process is free and easy - this process will allow you to answer your questions and also to become familar with the process and all the numbers

Henry Ko · Answer

Henry Ko · Answer

I ended up buying a house in Brooklyn. The bank considered my jersey house and Brooklyn Apt as rental income. I had a signed contract for the condo and jersey house. I'm currently looking for a contractor to renovate the kitchen and bathroom in Brooklyn if you guys know anyone????Thanks for all your help

Henry Ko · Answer