Question for Lenders Re Mortgages

[Patrick Torres]

I appreciate any lenders taking the time to read and respond to my post. I work with multiple local banks who underwrite differently, please consider the specific set of facts that I provide for this hypothetical. I’m looking for information regarding how and underwriter would view these circumstances most favorably.

Hypothetically say I have 100k in cash, a 50k HELOC on my primary residence, & 50k that can borrowed from a 401k. I am going to finance the purchase and rehab of a fourplex that will cost 120k. The bank I want to work with (because they offer the highest LTV on the cash out refi) will not count the income from this property nor from another fourplex that I recently completed because we have owned them for less than 2 years. Because they won't count the income on these two properties, my debt to income ratio might look high. I've read that using my 401k loan will not increase my DTI ratio, but it will lower my assets. If I use my HELOC I believe it will increase my DTI, but I'll have more cash and assets to show the bank. If use too much cash that might worry the underwriter. Do they consider that the cash out refi money will be used to consolidate that debit? Any ideas on the best way to utilize these resources in order to have the highest chance of qualifying with this lender?