No more DTI, lots of equity. What’s next?

[David Meier]

Hello All, my wife and I have 6 doors in Denver. We have a bunch of equity and have reached our DTI limit. Therefore a HELOC and cash out refi will not work. We would like to use the equity for a down payment and a mortgage. Our dream is to have a profit generating STR. Anyone have any ideas on how to tap into this equity?

[Kevin Romines]

I would want to look at the taxes to determine that your DTI is in fact at its limits. To be honest, loan officers that are not used to working with people with rentals don't always get it right in terms of the correct calculations, and other LO's are lazy, just saying. That said, if you are at the limit of your DTI, you can still tap the equity with a DSCR loan up the max. cash out limits which I believe are between 70-80% LTV. I would need to get my head in the guidelines to check and confirm the max. LTV, but this is what is sticking out to me on that.

The priority is always do a conventional loan when you can as the rates are the best there, followed by a Non-QM loan of some type, in this case a DSCR loan. Also a commercial loan works a lot like a DSCR loan when looking at debt ratio and also the borrowers experience. So there are options, you just need someone to walk through all the options with you after they properly calculate your income and debt via the tax returns.

I hope this helps?