All Forum Posts by: Maron Faulkner

Back end ratio for conventional non owner loan is 43% I assume you make $40000 a a teacher at a Catholic school or $3333 a month leaves $1433 monthly. I assume your IRS returns show a loss on the schedule C for your rental??? Two loan programs should work: Debt service ratio (you need the down payment and rents that the appraiser verifies on a schedule are used minus principle interest taxes insurance and any HOA. No haircut is given as in a conventional loan where 25% is automatically deducted from gross rents as general expenses. Second might be a BANK Statement Loan with this you supply 24 or 12 months bank statement (they generally only take ONE account) and the deposits are used less a ratio to determine your income. This is probably higher than what shows on your IRS returns as taxes are not used. If you don't deposit everything into one account, then start today. Funds from other accounts transferred don't count but your payroll check, rents and any other income do count.

@Caroline Gerardo

This is really interesting. Someone mentioned the debt service ratio loan earlier, but the bank statement loan is new to me. Right now, rent goes into a different account than my paycheck, but that's an easy fix. And yes to the schedule C loss. Thanks for the information.

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Originally posted by @Eric James:

But that's part of the problem. It sounds like these properties wouldn't qualify when you take into account all actual expenses such as vacancy, maintenance, etc,.not just the mortgage.

Eric, you are definitely spot on that this may be tough since I'm dealing with Portland (and, to only slightly a lesser degree, Boise).

I do have a pretty sturdy reserve fund tucked away for the rental house I already have, probably enough reserves for two SFRs actually. But when it comes to actual income, things get dicier.

And yes, both homes are gaining in value right now, but as I just read somewhere here on Bigger Pockets last night, that doesn't count for much till you sell...

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Originally posted by @Kyler Pace:

There are lenders out there who will lend on the individual property and it's cash flow rather than your personal finances. I'm not sure if I can name names, but Dominion Private Lending, Tital Loans, and Visio Lending are just a few that offer that product. I haven't used any of them yet, though.

Hey, Kyler, thanks for the suggestions, this sounds a bit like Stephanie P.'s DSCR loan idea above. This is my next step unless I get some traction pretty soon from one of my previous lenders.

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Originally posted by @Account Closed:

@Maron Faulkner

Why don’t you call your previous lender?

Great idea and I did, but they're in Boise and with the way this summer has started out, I haven't heard back yet. I think they're slammed.

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Originally posted by @Nick Robinson:

@Maron Faulkner
You probably will have a hard time with this one. I am sure you could find a lender to count 75% of the income on the SFR. I know the banks are starting to cut back on lending with their liquidity requirement. Will counting 75% of the income of the house give you a DTI under 45%? Been awhile since I bought a residential property I thought DTI was suppose to be under 42%.

Thanks, Nick. 45% is what they're telling me. 75% of potential rent gets me closer, but not close enough. Now I'm thinking borrow less perhaps and put more down...

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Originally posted by @Mark B.:

@Maron Faulkner Just sent a pm with a referral.

Thanks, Mark, I am going to look into this tomorrow!

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@Stephanie P.
Thanks, Stephanie.I didn't really know about DSCR loans, just read a bit this morning. I will look into this. Appreciate it.

1 Vote

Hmm, true that they understand the situation better than I do!

But reduction of debt (unless I sell my house or the rental) doesn’t seem to cut it in my scenario - even if I pay off the car, adding a third mortgage payment still has me well over the 45% required debt to income ratio. I don’t have any credit card debt.

When I bought my first rental, they figured in the potential rental income when doing their calculations but that didn’t happen this time (different lender, lower down payment).

The teacher’s salary part doesn’t help either…

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Applied for a 5/5 ARM with 10% down. But I didn't qualify due to my debt-income ratio. I already own one SFR in Boise plus my primary residence here in Portland, Oregon. So if I could figure this out, I would own a second SFR.
What the lender DIDN’T do was take future rent on the new house into account at all. They also prorated the rent on my Boise house to account for repairs and depreciation, which brought that number down to around $300, although in reality the rent there more than covers the monthly mortgage payment.

And voilà, I don’t qualify! Any tips? I am a school teacher at a private Catholic high school here so not rich, lol. But these sorts of experiences are getting in the way of my millionaire real estate investor status!

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Hi Tony,

Yes and yes. Plus as you mentioned, the learning curve lessons will be invaluable too.

I just think Boise is a good place to invest for someone like me and the stars seemed to align...so I did jump in!

I also just answered your email, thanks!

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All Forum Posts by: Maron Faulkner

Maron Faulkner has started 4 posts and replied 30 times.

Post: Debt to income ratio problems

Post: Debt to income ratio problems

Post: Debt to income ratio problems

Post: Debt to income ratio problems

Post: Debt to income ratio problems

Post: Debt to income ratio problems

Post: Debt to income ratio problems

Post: Debt to income ratio problems

Post: Debt to income ratio problems

Post: Boise - first rental house bought and leased!