DTI Issue. How to convince a bank to do a loan?

[Luke Mike]

Can I convince banks/credit unions to use boarder income?

goals and story: I want to house hack a large house (5000sqft) on the beach (Bay Area,California).
I found a great place. I would move in part of it (1500sqft), and rent the rest out on airbnb (3500sqft).
The rents will easily pay for the mortgage and then some.

If I were to count the future rental income (even very conservatively), my DTI would be ~20%.

However, banks do not count STR income towards my DTI on the mortgage application (they count it as boarder income, aka $0). Since they only use my W2, my DTI is way too high (65%).

What kind of products/banks could be willing to do this?


Type of property: Single family home
Location of property: Bay Area, California
Purpose of financing: purchase
Type of financing sought: Any. APR <4.5%.
Current or prior ownership of real estate: own 1 house. currently on short term rental as well.
Occupancy: owner occupied (1500sqft) with short term rental for the remaining (3500sqft)
Value of property at present and/or your offer price: $4,000,000
Anticipated or actual appraisal issues: no
Current rents per month: $25k
Fair market rents per month: $30k
Down payment or equity: I have $1m in the bank to put towards downpayment. More saved for reserves.
Source of down payment funds: own funds
Income Source: Salaried/hourly W2. This would not be enough to qualify for the full mortgage (DTI would be through the roof).
FICO: Excellent. 800+
Credit issues: None.

[Greg Scott]

LOL  If you are looking for a conventional mortgage, no amount of "convincing" will help. They have to follow the rules set by Fannie.  If you are instead getting a bank loan, then a good argument might help.

In either case, typically 75% of the rental income will be added to your income for qualification.  If the property is currently empty, you may need a short-term private loan until you have renters and can refi into a longer-term loan.