Construction Loan after Recent Vacation Rental Purchase?

[Jeff Pullman]

Anyone have suggestions tactically for how I would go about getting a new loan (likely a construction loan) on a new property after recently closing on a vacation rental within the past year?

For the sake of illustrating the question, here are some hypothetical numbers

Need - 500k construction loan

Have - $15000 in monthly income and 6500 in debt payments (primary mortgage, vacation rental mortgage, car) - 43% debt to income ratio. 

New loan would make it something like 58% debt to income. 

The vacation rental is cashflow positive, has a 5 year record of gross rentals of $100k, and will cashflow positive this year. So not only does that offset the payment, but it actually adds income to the equation, but I am being told that until there are 2 full years of financial records on the house/business, all the debt counts but none of the income counts.

Are there strategies to get around this? Construction-to-perm loan servicers who are more creative in how they look at things?

[Account Closed]

Is the construction loan for your primary home or for an investment property? You can always look at commercial loan for investment property construction and NO DTI will be looked at.

[Mohit Anchlia]

Look at the commercial loans. You should be able to get a loan with 20% downpayment depending on the value of the property and the area of the property along with 100% loan amount for construction.

[Jeff Pullman]

What are typical rates on commercial loans? It will essentially be a second h ome/investment vacation rental - mountain house that we use 20 days a year and rents for hopefully 150-200 days a year

[Andrew Herr]

Look into Private money construction loans. They are project-specific, not income-specific, and most likely can help you get to construction. Just make sure you have permits (or are working on it) and a contracted CCB picked out.

Here are two other quick numbers...because you will have to bring some cash unless the property has a bunch of value.

85% LTC

75%LTARV