Use income from a business to determine loan qualification

[Samantha Kuhl]

I think I remember David talking about something like this in one of the podcast episodes- what exactly do I need to be asking for at the bank for them use the income generated from a business to determine if we qualify for a loan, rather than our personal income?  Do all banks do this? Only certain ones?  Do I need to be asking for a specific thing?

We have an LLC that has one STR in it that is doing very well. We want to purchase another one through that same LLC. I don't think we'd get approved through our personal incomes because this would be our 4th house, and for the last house, they only looked at what our W-2 jobs are bringing in.

Am I making up that this is a thing banks can do?

[Andrew Garcia]

Hi @Samantha Kuhl, I'm a lender so I always get excited when I see posts like this. Below I have outlined a few of your options:

1. If you have been receiving income from this LLC for at least 2 years, you may be able to use conventional financing.

2. You can use the bank statements from the LLC as income to qualify.

3. You can use a no income and no job verification loan to qualify solely based on the pro forma cash flow of the property you are looking to buy. It is known as a DSCR loan and it is our most common investor product.

4. You can do a net-rent situation where they take how much you make per month and subtract the mortgage amount. The rest is counted as income. It is not based on the tax returns or Schedule E. It has slightly better pricing than DSCR but has stricter underwriting guidelines.

Don't worry, you are not making up anything. We do this day in and day out so if you have any questions, feel free to ask.