Factors affecting conventional mortgage origination

[Patrick Menefee]

Hey all,

Looking at 2 potential investment properties and trying to evaluate some of the criteria a lender would use to underwrite me. As a starting point, i have a mortgage on my primary residence.

The first house i can easily cover down+closing and have no concerns. However the second house would only leave me with a very small amount of reserves, and would be my third mortgage. I’m not concerned with the financials on my end as the properties would cash flow well, I have access to a line of credit if an emergency arises, and my reserves will be replenished quickly enough.

My concern is how this would look to a lender. With good credit, should I expect this lack of liquidity after the final house to cause any issues? And if so, should I expect that to show in the form of a higher interest rate, or is there potential to not get approved? Also, do they factor in rental income with DTI calculations? If so that won't be a concern as it'd be under 20%, but if not I'd be around 35%. Will that cause any concern?

Thanks in advance!

[Harjeet Bhatti]

@ CJ M. This is overlays of lender nothing can be done. You have to find other lender, guidelines from Fannie Mae

If the retirement assets are in the form of stocks, bonds, or mutual funds, the account must meet the requirements of B3-4.3-01, Stocks, Stock Options, Bonds, and Mutual Funds, for determining value and whether documentation of the borrower’s actual receipt of funds is required when used for the down payment and closing costs. When funds from retirement accounts are used for reserves, Fannie Mae does not require the funds to be withdrawn from the account(s).