DTI issues applying for new loan- HELP

[Isabella Romano]

I am looking to buy a new property and am running into issues getting qualified for conventional loaning due to high DTI. I have a rental property which cash flows, however on my last tax return I had reported the rehab costs for this property as a write off. So the loan for the rental shows as a debt but the income is not reported to the bank where we are trying to get the new loan. We will be renting our current property when we buy this new property to use as our new primary residence. Any advice on how to get rental income reported (from the current rental property and future income from renting out our primary residence) and lower the DTI??

[Robin Simon]

Quote from @Isabella Romano:

I am looking to buy a new property and am running into issues getting qualified for conventional loaning due to high DTI. I have a rental property which cash flows, however on my last tax return I had reported the rehab costs for this property as a write off. So the loan for the rental shows as a debt but the income is not reported to the bank where we are trying to get the new loan. We will be renting our current property when we buy this new property to use as our new primary residence. Any advice on how to get rental income reported (from the current rental property and future income from renting out our primary residence) and lower the DTI??

Hi - you sound like a perfect candidate for the "DSCR Loan" option - its the loan type thats popular wwith investors and one of the big reasons why is the exact situation you are describing - running into DTI troubles. DSCR Loans don't take DTI into account and are aimed at looking primarily at the property so if it cash flows, don't have to worry about personal income!

Check out too this 12-part series published here on BP on the topic, hope it helps!

BP-Published DSCR Guide!

DSCR Loans: What Are They And How To Get The Best Terms

https://www.biggerpockets.com/...

DSCR Loans: How To Use Pro Strategies To Save More And Make More

https://www.biggerpockets.com/...

Multifamily DSCR Loans: A New High-Impact Loan Option For Real Estate Investors?

https://www.biggerpockets.com/...

12 Frequently Asked Questions (And Answers) About DSCR Loans

https://www.biggerpockets.com/...

8 More Commonly Asked Questions and Answers to DSCR Loans

https://www.biggerpockets.com/blog/eight-questions-and-answe...

What Documents Do You Need for a DSCR Loan?

https://www.biggerpockets.com/blog/what-documents-do-you-nee...

BRRRR Loans: What Are the Options, and How Do DSCR Loans Stack Up?

https://www.biggerpockets.com/blog/brrrr-loans-what-are-the-...

Short-Term Rental Loans: What Are the Options and How Do DSCR Loans Stack Up?

https://www.biggerpockets.com/blog/short-term-rental-loans-a...

DSCR Loans: Terms to Know When Working With These Popular Rental Loan

https://www.biggerpockets.com/blog/dscr-loans-terms-to-know

What’s Next For DSCR Loans? Updates For 2024 and Beyond

https://www.biggerpockets.com/blog/what-is-coming-in-2024-fo...

What Are Current DSCR Loan Rates? Key Market Movers and How to Track Rates

https://www.biggerpockets.com/blog/2024-dscr-loan-rates-and-...

How Do DSCR Lenders Calculate Your Interest Rate?

https://www.biggerpockets.com/blog/how-do-dscr-lenders-calcu...