Financing Help for Low Income

[Makayla Mack]

Hi All!

My mom is interested in buying her first investment property and I've been doing my best to help her get started. Her big picture overview is that she has about $600k between Roth & Traditional IRA accounts and a 401k account, she also has an estimated $400k equity in her primary residence. It seems like between these assets she should be able to access some cash to help her get started in investing. The biggest issue we've run into so far is her income is very low, her primary home is her only debt but just with that her DTI is close to 80%.

My first thought was a cash out refinance or home equity loan or loc. With her high equity and a credit score of 820 we were hoping that would work, but it seems like her DTI is just too high for those options.

My question is: does anyone know of a way to access home equity in a way that does not rely on a <50% DTI? If home equity is not a feasible option right now, would anyone recommend taking a 401k loan or even a withdrawal from one of her IRA's? I've also thrown out the idea of a hard money loan just to get her started, once she is showing some income from her new property her DTI would be better and she could tap into her home equity to pay off her hard money loan.

If anyone is curious, the property type we are looking into purchasing is a ~$350k SFR in San Bernardino County that will be used for a STR. I currently own one STR property in the area so we are looking for something similar for my mom.

Thank you in advance!!