All Forum Posts by: Brittany Minocchi

As Chris mentioned, now many not be the best time to jump into investing. I would focus on improving your credit and obtaining a more stable income so that conventional financing is an option. 

Refinance into a debt service loan. You can do this as a rate and term refinance with no cash out, or a cash out refinance. You can close in an LLC and don't need to provide employment history, income or tax returns, and DTI isn't a factor. Instead, the income from the property is used to qualify you. You'll want the rents to at least cover the monthly principal, interest, taxes and insurance (and HOA if there is one). I hope that helps, happy to answer any other questions if you'd like to connect!

Hi Jose!

To use conventional financing, you'll need to have owned the property for at least 12 months and you'd need to close in your name. If you don't meet that 12 month seasoning requirement and/or want to hold the property under an LLC, a debt service loan may be a better option. If you completed rehab, there may not be a seasoning requirement. Feel free to connect if you have any other questions!

DSCR is going to be your best bet here. Foreign National programs sometimes require that you have US credit and most will want you to have a US-based bank account. If you're closing in an LLC/entity, there will be some requirements there as well. For down payment, plan to need 30-40%. For reserves, some lenders want 6+ months. Expect rates to be higher than "typical" financing programs - right now, I'd plan for at least 8%+ depending on the whole scenario. Happy to answer any other questions if you'd like to connect!

Shouldn't be an issue as a first time investor, but if you are also a first time homebuyer (aka renting or living rent-free) lenders sometimes have issues with that. If you have excellent credit and enough for a down payment/closing costs without totally wiping out your funds, I say go for it! Happy to connect if you have other questions. 

I'm not a direct lender, but 75% LTV shouldn't be hard to find (assuming you're looking for a debt service loan, conventional caps at 75% on a SFH) if your FICO qualifies. There are only a couple of 80% options and you'll see a noticeable jump in rate. Chances are slim that you'll find someone willing to bypass an appraisal, and if you do, you'll probably pay more through that lender.

You should have some options! There might be some hoops to get through with conventional financing with your income situation, but if that doesn't work, you could use a debt service loan. You'd have to refinance out of it if you ever needed to move into the property since it's only available for investments. No income or employment history required on that type of loan, so it would simplify things for you. 

What's the rate on FHA? At first I thought 10.625% until I realized that was for your down payment. Generally if you can qualify for conventional, that's the better route.

Couple of notes based on comments you made in response to others:

1. You mentioned that your DTI is over 50% with less 10% down, so that's not an option....that 50% limit isn't necessarily a hard-and-fast rule, so you may still be okay @ less than 20% down (not to mention not all lenders calculate income the same way). Your FICO will come into play here.

2. Fannie Mae only requires ONE year of property ownership or management experience to allow you to use rent to qualify. If your lender is requiring two, that sounds like that's their rule. 

Although I still think conventional is the better option, I wouldn't put 20% down if I didn't have to, unless you know you'll live in/own the house long enough to recoup that additional $. 

Hey Jennifer!

Debt service loans all the way for your situation. FICO is still a factor (yours is high enough that you shouldn't have any concerns here), but we don't look at employment history, income or DTI. Instead, lenders want to see that the property's income can cover (or exceed) the monthly principal, interest, taxes, insurance and HOA (if applicable). Based on the info in your post, as long as taxes and/or HOA aren't crazy high, you should be good!

Biggest downside with this type of loan is the prepayment penalty - PA is one of the weird states where some lenders make you "buy out" the penalty, meaning you'll have higher fees or a higher rate. Not all of them do though. Just something to be aware of. If you don't have to buy it out, 3-5 years is common and a sale OR refinance in that time will trigger the penalty. It's usually structured as a stepdown. For example, a 5 year PPP would be 5/4/3/2/1 - a 5% penalty in year 1, 4% in year 2, 3% in year 3, and so on. 

Hopefully that helps, feel free to reach out if you have questions or need anything else!

Nope.