Another strategy besides DSCR Loan to keep rental when income low

[Laurie Austin]

I have a condo in a high appreciating area of Texas that cash flows $100 a month and used to be my primary residence-great loan at 3% on it and about 75K in equity.

I want to buy a home in another state on a lake to STR. My thought was to use conventional financing as my primary residence to get this new property however my income does not qualify me for the amount I need as they are only counting 75% of the income from the condo rental and I'm self employed which means my Adjusted gross ends up being low. Basically I need a much bigger downpayment or adjust my purchase price to buy conventional and keep the condo.

I want to keep the condo but see these as my only options-am I missing anything creative I could do? 

1. DSCR loan on the new lake house property but rates are ridiculously high which cuts in the margins substantially.

2.   Sell the condo take the equity and purchase 1 or 2 properties in the new area.   (least attractive to me)

3. Getting a HELOC is not attractive as the pmt on the condo plus the HELOC pmt would be similar to just doing the DSCR loan... and increases my DTI ratio...

What am I missing-help me get creative here to be able to keep the old property and buy the new.   

Thanks-Laurie

[Brandon Beardt]

Quote from @Laurie Austin:

I have a condo in a high appreciating area of Texas that cash flows $100 a month and used to be my primary residence-great loan at 3% on it and about 75K in equity.

I want to buy a home in another state on a lake to STR. My thought was to use conventional financing as my primary residence to get this new property however my income does not qualify me for the amount I need as they are only counting 75% of the income from the condo rental and I'm self employed which means my Adjusted gross ends up being low. Basically I need a much bigger downpayment or adjust my purchase price to buy conventional and keep the condo.

I want to keep the condo but see these as my only options-am I missing anything creative I could do? 

1. DSCR loan on the new lake house property but rates are ridiculously high which cuts in the margins substantially.

2.   Sell the condo take the equity and purchase 1 or 2 properties in the new area.   (least attractive to me)

3. Getting a HELOC is not attractive as the pmt on the condo plus the HELOC pmt would be similar to just doing the DSCR loan... and increases my DTI ratio...

What am I missing-help me get creative here to be able to keep the old property and buy the new.   

Thanks-Laurie

Hi Laurie,

One creative option you can try exploring is trying to find any sort of seller financing deal for this lake property. Of course, that's easier said than done, but that's just one option that popped into my mind when reading your post. It sounds like your main goal is to keep the condo while being able to purchase another property, & if that's the case, keep the condo then. If doing so means your DTI will be out of line when trying purchasing more property, you will have to get non-conventional alternative financing to help purchase more property. From reading your post, it seems you don't want to increase your DTI at all, which is where these alternative programs come in, such as the DSCR you mentioned. DTI isn't even considered with this type of financing. Like you said though, you'll more than likely have to come up with a higher down payment, and the rate will be higher, but that's the trade off.