Using Prjoected Rental income in a purchase

[Joshua Austin]

I am attempting to buy my first investment property but am having a hard time with attempting to use rental income without being owner-occupy. I know there is DSCR loans that base it off the cashflow or the property but as a first time investor they require roughly 35% downpayment. Looking for any tips to get a pre approval while using rental income

[Katherine Blazer]

Hi @Joshua Austin, On primary residence, you can use 75% of the projected rental income on additional units. So if you are looking at a duplex, you can use 75% of the second unit's income to offset the mortgage. If it's a triplex, then the second 2 units and quadplex the additional 3 units. It's a primary residence, so you will need to occupy one of them. This is true of Convention and FHA loans.

When you move into DSCR loans, you are looking at 20% or more down, and you can use all of the projected income to qualify however it will need to cover its expenses, so principal, interest, taxes, insurance, and HOA or property management fees it may have. Your rate and downpayment will depend on your credit score and the additional income the property will produce after the above expenses are taken care of.