Really? 240k income "insufficient" to buy a 140k investment property???

Question

Okay, I admit it:

While I do have a pretty good income, I also have higher expenses than most people.
But with 20k a month, is a mortgage payment on my primary residence of $3,500 really that big of a deal? (Especially given the fact, that I recoup $2,000 in rental income, which - you guessed it - cannot be accounted for because I can´t show a 2-year history yet. But this is another topic...).

I believe here is my main challenge: part on my income is derived from a company I own abroad. Now, get this though: all of my income is shown on my US tax return. It´s not that I waive with a letter in a language no one understands, stating that my company is doing great. Nope - it´s all on my US tax return.

Like a mortgage broker told me: he tried "every angle" to fit my situation into "the system", meaning Fanny Mae and Freddy Mac don´t like my situation.

Sure, at the moment I´m working with a bank that also offers inhouse loans (aka portfolio loans), but it still irks me that "the system" seems to be so highly automated that no human with a brain between their ears could look at an application and decide that someone might be good for a loan, although he or she doesn´t "fit into the system".

I don´t have a real question for you guys, I guess I just wanted to let some steam off...

Happy investing!

Karyn T. · Answer

Don't feel bad. I'm a physician (with stable W2 income higher than yours) and my spouse was Senior enlisted military when we went to buy our house (with a lower monthly mortgage than yours) in 2012. We have excellent credit and have bought 2 other homes and 3 cars through our credit union in the last 15 years. They approved us for a home THREE TIMES as expensive as the one we ultimately bought....yet they denied our loan when we finally put a contract on it. We had to go through another bank and it still took 5 months of haggling with the loan officers.

The recession ruined it for almost everyone.....

Marcus S. · Answer

Thanks to everyone for your great feedback!

@Kristin Compton and @Karyn T., when I read your stories  it does remind me that I'm only in for an investment property, not my primary residence. So thanks for reminding me. If it doesn't go through, no big deal, right?

But here is the thing: before those challenges arose, I only WANTED to buy the house. Now that someone tells me I can't have it, I NEED that house!

LOL

Thanks again!

Shaun Weekes · Answer

@Marcus S.

I'm almost positive that your situation can be done. If you have C.I.A (credit, income, assets) a loan can be completed. If you're truly not writing off that much and showing 20K in income this should good to go.

As for the 2 year rule there is none with Fannie so that tells me that you loan officer doesn't know or doesn't have the support or has OVERLAYS :(

You need to find a Loan Officer that knows the ins and outs of investment financing.

I hope this helps and have a good one Sir.

Adam Hershman · Answer

Hey @Marcus S.,

You're right, they are inflexible and sometimes illogical, but hey it's the federal government, did you expect the process to make sense?

Adam

Jerry Padilla · Answer

@Marcus S.

Here is a guideline on considering foreign income. Hopefully this helps.

Foreign Income

Foreign income is acceptable only if the income can be verified on U.S. personal tax returns. Foreign income should be paid in U.S. currency. However, income paid in foreign currency may be considered on a case-by-case basis if it's converted into U.S. currency.

If you have an investor friendly lender that can strictly follow Fannie Mae guidelines than you can consider the rental income prior to two years. If there is a net rental income on your tax returns - that is used. If you have a lease agreement than 75% of your rental income is used, and a 25% vacancy factor is considered. The lease agreement is used if you purchased the property and it is not yet reflected on your tax returns.

Joel Owens · Answer

Different loans for every color of the rainbow. The key is you might have to search really hard to find it.

Don't get me started on being a high income earner or self-employed. This country treats the self-employed and business owners like dirt.

I have had mortgage brokers say for residential they like hourly workers at large corps because they fit into a vanilla box of an "ideal" borrower. The paper is easy to sell off. Someone could make 10 dollars an hour and get  a mortgage but the hours get cut next week to 30 and next month they can't pay their bills.

Meanwhile the self-employed person has reserves over what the house costs to buy and they have to write dozens of explanation letters and go with a non-conventional lender still at great rates but a lot of junk to deal with.

I have a chiropractic doctor friend that makes tons of money but writes stuff down to lower taxes. Any common sense lender would see that looking at the books. These lenders will not count anything so my friend stays at his developer friends mansion while he Is out of the country. The rest of the time he just rents. Common sense really has gone out the window in this country with some things.

Brian Gibbons · Answer

I have lived in IRE,Australia and New Zealand.

Here is your solution:

1) Long Term lease Purchase or 2) Free and clear House w Installment Sale.

Get your dream house today.

Find an expired listing.

Offer 20% down.

Good luck!

Brian

Kristin Compton · Answer

My husband and I got pre-approved to buy our first house last year and after searching, finding, and inspecting our future home, got denied the loan due to the way we get paid.  I was getting a size able stipend through my job and he was getting half off his pay through a booster club (as a gymnastics coach).  We were both very disappointed and ended up re-signing our apartment lease for another  year.   Different situation, but I feel your pain Marcus.

Really? 240k income "insufficient" to buy a 140k investment property???

Most Popular Reply