Tips for looking financially better for lenders

[Joel Nobles]

Looking to get into real estate investing. Primarily rental properties. I have saved up a good amount first my first investment, but dont have enough income to get approved for a certain amount, any idea of what i can do ? 

I work for Boeing but I’m not at the point yet where I’m making a lot.

[Kevin Romines]

@Joel Nobles If you are looking for a fix and flip loan, you can get some of those without it being a debt ratio issue so long as you have the down payment required. Once the rehab is complete and you have it rented, its should cash flow for you and it shouldn't add to your debt ratio very much if any at all. It might even add to your income. Here is the way that Fannie Mae looks at rental income. 

GROSS RENTS X .75% MINUS PITIA PAYMENT. 

If its a negative number, that gets added to your liabilities, if its a positive number, it gets added to your income. For instance, Gross Rents = $2500 X .75% = $1875 Minus PITIA of $1650 = $225.00 positive income and is added to your income. Another for instance, Gross Rents = $2500 X.75% = $1875 Minus PITIA of $2000 = -$125 so its added to your liabilities and then your debt ratio is calculated from there. So as you can see in the example, it only added $125 to your liabilities or may have contributed as much as $225 to you income. It really doesn't hit in a big way one way or another in most cases.

But if you did find that you have a debt ratio problem when all the math is done, you can still use an Non-QM or Portfolio loan called a Investor Cash Flow loan. On this loan, so long as the rents are equal to or more than the PITIA then that's the only requirement regarding debt ratio. You don't put income or employment on the application, the property either throws off enough to cover the payment or more, or it doesn't. It can be that simple.

Generally you want to target getting a Fannie Mae refinance off the fix and flip loan because the rates are better, however you still get good rates on the Investor Cash Flow loan and there is no MI which there can be on a Fannie Mae loan, so the payments can be close to the same at times?

I hope this helps.