All Forum Posts by: Ben Hunt

@Ryan Avila, thanks for the feedback given your real life experience.

I think that archive you shared is old however, from 2012.

@Ryan Avila,  I just read through as much of the official document as possible and didn't see this test directly.

In sections,6 Manual Underwriting of the Borrower, and 5 Underwriting the Borrower using the TOTAL mortgage scorecard, the only mention was that the total rental income would be calculated by PITI - 75% of appraised rents. If the value is a negative amount it would be counted against the borrowers' gross monthly income.

Where do you see in the official documents that it's a pass/fail rule?

https://www.hud.gov/sites/dfil...

@Jacob Pereira I can only put down a max of like 7% and I haven't found any conventional loans that go that low on the down payment.

I am really wondering though as to whether the rule is a hard and strict rule or whether there is leniency in it given other factors. 

@RussellBrazil, are you implying that the underwriter will treat the rule as strict with no exceptions?

I'm looking at buying in an off market 4-Plex in Austin Texas using FHA financing where passing the self sufficiency test is iffy.

In my calculations, 75% of the total rent covers approximately 100% of the PITI. However, there is not much room for deviation here.
If the appraiser finds that the fair market rent is a bit less and the calculation then shows that 75% of the total rent covers 95% or 90% of the entire mortgage, is the whole financing deal a no-go?

Does the underwriter take into account my income or credit history as a factor for leniency on this rule?

Thanks and let me know,

Ben

@Bryan Noth Correct.

@Upen Patel, Even if you plan to rent out the other 3 units?  What about if I just rent out all 4 with the hard money loan and move into one of the units when I'm able to refinance it?

Hi All!

I've been in the market for a 2-4 Plex property for a while, but am just out of the range of FHA limits. I'm looking in a pretty "hot" market with some pretty pricey properties with the intent to owner occupy. I have a perfect credit score, stable job and enough to put 5% down but am usually 25-100k out of the loan range I need to be in.

Is there any hard money lenders that would loan right now past FHA limits?

For some of the deals that are just out of reach, I'm thinking about going the hard money route and refinancing a year or so down the road.

Thoughts?

Ben

California Lite! That's a new one :P

Roger. Thanks for the feedback @Ryan Kelly

@Michael Tyler

Thanks for the response!

I'm looking at doing a Direct Mail marketing campaign for specific 4Plex's. That's when I'll be really utilizing the results of the calculation to make an investment decision. At first I'll be managing the property, because I'll be house hacking. However, afterwards I definitely make take you up on the referral! Thanks for that.

Great feedback on the 2/1% rule & bedroom size relating to vacancy rates. 

I also hadn't thought about separating out the vacancy/repairs/capex from cashflow. Interesting take on it.