Best Way to Finance House and Rehab?

[Rusty Pollard]

Hello everyone, I've got a house with a walkout basement apartment under contract with a wholesaler and scheduled to close next week. I have it locked in for $245k, the rehab will be around $30k, and ARV should be north of $315k. we're planning to occupy upstairs and rent downstairs. Downstairs should cover most of the mortgage as it should rent for around $1000. I have seller financing lined up for the first 8 months, and I am planning to refinance as soon as the rehab is finished to capture the increased value and reduce my cash outlay. The complicated part is when we move into this place I will be leaving my comfy W-2 job and going to a new job with a much smaller salary but good potential for commission. Will this make my refinance harder since I just changed jobs and an making less money (salary)? Am I overlooking any creative options as far as this situation goes? I thought 203k may be an option, but I was steered away from it while talking to my mortgage broker. Thanks for your input!

[Michael Cohen]

@Nick G. @Rusty Pollard

Conventional (Fannie/Freddie) loans cover the verification of commission income as such:

A minimum history of 2 years of commission income is recommended; however, commission income that has been received for 12 to 24 months may be considered as acceptable income, as long as there are positive factors to reasonably offset the shorter income history.

For FHA and/or FHA 203K, the rules are:

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If you're base income (even if smaller than it was previously) cover your DTI, then you're fine. If you want to use the commission income, then 12 months is the minimum provided there are compensating factors: your income increased dramatically, non-borrower income taken into account (i.e. spouse's income), or something similar.