DTI is maxed out. What now?

[Tony Crabtree]

Hi! My name is Tony Crabtree and I've been a biggerpockets member for a few years now. I have two rental properties that I love and a personal residence. All of which are in mine and my wife's name. I live in Middle Tennessee ( Murfreesboro specifically) near Nashville, and I'm having trouble taking the next step. My father is willing to play the role of hard money lender with me, and I also have made some great connections here with being able to possibly find a good deal on a property. I had envisioned using the hard money, but a fixer upper, do the work, refinance it and get the cash out to pay my dad, then having a great property in my portfolio. However, I haven't found a bank or lender willing to guarantee I could get a cash out refinance loan. Are local banks the place to turn to? Does anyone else have success there? Looking for all good options available.

[Chris Mason]

Hi @Tony Crabtree,

Assuming your scenario is like 90% of REI that say their DTI is "maxed out," the answer to your "what now?" question is to find a REI-friendly local lender with no (or minimal) overlays that'll count rental income aggressively/properly, including counting rental income from the property you are purchasing (which is totally allowed if you just underwrite to Fannie guidelines with no overlays). 

The overwhelming majority of lenders are not REI friendly. It's a niche. Just like your general practitioner doctor isn't where you go when you've got cancer, your general purpose mortgage banker/lender/broker isn't where you go for this very specific sort of DTI "issue."

Have you mentioned your DTI "issue" at your local REIA? I bet someone will be like "oh, I had that 'problem' five properties ago, then I met LO Sally who solved it (for example) by looking at the lease agreements for the property I purchased too recently to appear on two years of tax returns."