Questions about DTI

[John Cho]

Need some advice and some basic questions about maxing out conventional financing before resorting to commercial financing/DSCR loans for STR.

Im trying to figure out how much I can afford on my next acquisition based on DTI. Ive got pristine credit (>790) and can put 20% down. Some of the lenders Ive spoken to have just used my W2 wages and discounted what Ive made on K1 income as a LP in syndicated deals and 1099 income reported on schedule C. I also have irregular biweekly paychecks due to variable income I make on bonuses but my W2 is relatively stable year to year. Im also a little confused that some lenders wont consider rental income from a STR at all or some after one or two tax returns and how that fits into DTI calculations.

What do I need to communicate to lenders/brokers that so that I can get gauge of what the max purchase price I can seek on my next acquisition
while minimizing the amount of financial colonoscopy I need to perform with all the document requests/credit pulls? 

[Scott E.]

If you gather the following documents, put them all into a dropbox, and send the dropbox off to a few loan officers, you should get a good idea as to what they can do for you. A good MLO will review your file with an underwriter prior to stringing you along due to your situation is a bit more complex than average. Call a big bank, a local credit union, and a mortgage broker.

-Loan application (this will vary from lender to lender)

-2 years W2

-2 years 1099

-4 recent pay stubs

-2 years personal tax returns

-2 years business tax returns (to include K1, 1065, 1120, etc)

-YTD P&L for your businesses

-Schedule of REO

This will give them enough to know whether or not you will "fit in their box"