Lender for rental properties after going self-employed

[Justin Bock]

Hello, I'm looking to obtain financing for various rental properties. Earlier this year, I quit my W-2 job and now work full-time as a real estate agent and investor. My wife still has her W-2 job. My income this year will actually be more than last year but I'm worried that I won't qualify for conventional loans (my preference) based on DTI if we use only her W-2 since that's the only documentable monthly income. Our credit is very good and we have ample cash.

I'm looking at some low cost rental properties (under $90K each) as well as multi-unit properties up to $400K.  I know that I can go through companies like Lending One and Corevest but sometimes their products don't exactly fit (I don't meet the minimum loan amount in some cases) and I'd like to explore other options.

I have tried finding a small bank in the area (I'm in the Raleigh/Durham area) that does portfolio loans but haven't had much luck.  Can anybody advise on how I can obtain conventional or "better" financing than direct lenders like Corevest or LendingOne?   Any and all options would be appreciated!

[Kevin Romines]

The 1st loan type to go after would be a conventional as the rates should be the best. You may run into a debt ratio issue as you stated above. If you cant make the conventional work, on to the next. 

The next type of loan that you can look at if you have a debt ratio issue is an Investor Cashflow program. Under this program, no income or employment is put on the 1003. The property must rent for equal to or more than the PITI payment of the mortgage. If it does, then your good to go on debt ratio. Typically the down payment on this type of program is 20% so a little higher than a conventional SFR but its also 20% on a 2-4 unit as well, so better than a conventional on those. The rate tends to be a little higher, but that is the price that needs to be paid in these temporary times. You can refinance once you have the prescribed 2 years self employment.

The investor cashflow program is a Non-QM or Portfolio type loan. Not all lenders do these, but many more are starting to. You will need to work with a broker or a correspondent lender to get access to these types of loans. If your not sure who does these in your area, ask other agents or call the title companies. The title companies will know as they close the loans for these lenders. 

Good luck and happy investing!!!