Owner-occupied Home purchase with High DTI 55%

[Jeffrey Suarez]

Hi,

Looking to move purchase and move into our 3rd property (most likely early next year)

We are currently renting in Orange County, and would like to buy basically in the same neighborhood once our lease is up.

Our previous home is now being rented out for basically what our mortgage payment is. 

Currently building an adu on our previous home, and will rent that when finished at a huge Cash flow once completed in the next few months. 

We also have a STR, but next year we found a solid tenant (doctor) that wants to rent it long term at a small positive cash flow.

0% credit card debt once the adu is finished, and thanks to Biden student loan for wife will be gone. 

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Pulling a heloc on the STR right now, and that will basically be our 5% down payment we need for our next owner occupied home.

I do have the option to Refi my home to come up with the 20% down payment but that wipes out the low interest rate I pay now (under3%)

Issue is that SOCAL homes are in the 600-700 range for the fixer uppers I am looking at. ( I am a contractor, fixers are up my alley)

At 8-9% interest rate the payments will be in the $4500 range.

That puts my DTI at 56% Once I factor in the rents @75% projected.

On paper I look stretched but the full rents more than cover what I need. I have a decent 401k for reserves, and enough cash for 4-5 months.

If I calculate full rents then my DTI is 51%

I want to put as little down as possible, hold onto reserves. I'm seeing that the bidding wars are gone, and sellers will be getting more hungry in the coming months to take anything other than straight cash no contingency offers. 

I see some FHA loans with 55%dti, but are those feasible with low 5% down payment? Our credit is 750plus.