Before any of the comment trolls pop in. Yes I’ve already went to US Bank and Small Business Association, they said my income was to low to their liking.
I purchased a foreclosure in Bonner Springs, KS rehabbed it and currently have it rented for $650 per month on a 12 month lease. Looking to obtain $55,000 and the current county appraisal of the property is $76,200.
I’m using the money to pay off the Prosper Hard-Money loan at 23% I got for the property and my personal line of credit.
So essentially after the loan I’ll be 100% consumer debt free. With my person $930 per month 30 mortgage on person residence and the rental property mortgage. Currently collecting $1,300 per month from rental and rooms rented and attending school for “Construction Management.”
I see you went to a retail bank and was turned down. I suggest you go to a mortgage broker that loans to investors. They understand what we are trying to do. I have a high income (Barrak Obama hates me for no reason other than how much money I make) but still could not get a retail bank to approve a mortgage for my personnel house that was $100,000 below value and a credit score over 700. I went to my investment mortgage broker and pow he got it done. If you are a real estate investment person you have to use investor grade professionals for everything from then on. Never use retail professionals.
These days all mortgage professionals have access to the same programs. Conventional (Fannie Freddie),VA, FHA, USDA. That is it. While using a broker might enable you to find a better rate than a retail bank I think it is fair to say that it is not going to find you a “special” program. What it comes down to is the depth of knowledge of the professional your speaking with. Whether they know how to interpret tax returns, calculate income and rent using the suitable methods accepted by UW, etc…
Based on what you posted it appears as if you have no income other than rental income. I ran your scenario and this is what I show you will need as income to qualify for this loan.
$55,000 Loan at 4%-P&I-$262.58 (i estimated escrows at $83 per month taxes and $50 for insurance) givng you an estimated payment of $395.91 for PITI.
You will be allows to use 75% of the rental income on the lease. $1300 x 75%= $975
$975- $395.91 = $579.09 as the income you can use towards qualifying for this loan.
Primary Residence payment of $930 per month
Your max debt to inbcome ratio is 45% for a conventional loan. Which means all of your payments combined cannot be more than 45% of your total income.
$930 / 45% = $2066.66 per month. This means that your total income needs to be at least $2066.66 per month. Your making $579.09 after expenses on the rental property so you need to show at least $1487.57 in additional income monthly in order to qualify for the loan you are looking for.
Local banks may allow your debt to income ratio go to 50% but probably not much higher than that.
Hope this helps.