hard money and debt-to-income ratio questions

[Scott Goulet]

Hello BP, 

I have a question regarding hard money loans and the debt-to-income ratio. 

I want to use a hard money lender to purchase a medium-sized multi-family property for buy and hold purposes. After the rehab, I want to rent out the property and put conventional money on it, I assume the bank I get the new loan from would look at my debt to income ratio correct?

I make decent money ($70K per year) and I have two properties right now, my primary residence and a rental property. The banks tell me my debt to income ratio is maxed out.

How do I get around the debt-to-income ratio? I am trying to scale. I don't have a problem going to a hard money lender, but I am unsure about the refinance/ Debt-to-income ratio. 

Thanks! 

Scott G

[Bob Green]

Hello Scott,

Your debt to income is not factored into approval when it comes to hard money lending. Your credit, experience and liquidity are the determining factors. When it comes time to refinance and you choose to refinance under conventional financing guidelines then your debt to income will come into play, however if this is an issue you can always refinance with an asset based lender. In this case the lender will not look at DTI, but will approve based on credit, cash flow, location of property and loan to value. "Where there is a will there is a way my friend"