How much will the bank lend me?

[Matt Clark]

hello,

     I will be closing escrow on a piece of land that I own soon. Im looking to reinvest the 275k into a rental home. I'm self employed and married. Last year we reported about 50k in income, almost all my wife. We have no other debt and own two other properties clear. (About 700k) We have about 50k in cash and about 50 in Ira etc. 

    I'm looking for some advice on how to best borrow money to purchase a more expensive property. Anyone out there ever been in the same situation? Thank you in advance! Matt

[Robert Sepulveda]

If 50k is your last two years income, traditional investment property solutions will allow 43% of your income to be applied to all your monthly debt.

based on your income:

$4166/month income

$1791/mo is your total debt you can support for all your mortgages and other debt. That will most likely be your limiting factor more than loan to value. you'll also need to keep at least 6 months of reserves.

If you go portfolio, the limits on debt raise to about 50% but the ltv usually drops to 60% or so. There's also rental property portfolio's that only consider what the market rents are, and none of your other debt. These raise the reserve requirements to 12 months and best when you have lots of properties that hurt your dti (debt to income ratio).

Most nationwide banks lend on investment property. Credit Unions as well. Use those first until you get resistance, them move to portfolio products.