How to get a mortgage with good credit when the DTI is to high

[Yosef A.]

Hi guys! It's nice to see a panel of such nice people where everyone is looking to help one another!

My question is like this: I bought a single family rental a year and a half ago, since it's in a neighborhood where the value is rising very quickly. The rent covers the expenses, with a couple of hundered dollars left over each month.

I now have alot of equity in the house, yet can't refinance since with my mortgage on my primary residence, and car loan, the debt to income ratio is to high.

Any ideas on how to get past this, and refinance in order to cash out, and buy another property?

Looking forward!

[Chris Mason]

Hi @Yosef A.,

If you could get the purchase mortgage, and had a similar car payment and income at that point, then you should still be able to refinance. I'm guessing the lender in question isn't counting the rental income because it's a refinance and it has not appeared on two years of tax returns.

Good news: it doesn't have to be on two years of tax returns. Get tight with your lender, or find one that's more REI friendly. DTI doesn't max out at 35%, Fannie is actually going to high 40s currently.