It all comes down to a few important factors: credit history, debt to income ratio, down payment, cash reserves, and employment history.
Here are the requirements:
CREDIT HISTORY - lenders use an automated underwriting system. This sophisticated system analyzes risk by reading credit reports and other factors. If the system gives an "approval" and lender can meet the conditions of the approval, you're pretty much good to go.
DEBT TO INCOME RATIO - maximum debt ratio is 45%. This means all of your debts (including proposed rental property payment) divided by your income, proposed rental income cannot be more than 45%.
DOWN PAYMENT - Minimum 20% down payment
CASH RESERVES - after you pay down payment, closing costs, prepaid items, you must have 2 months reserves for every financed property you own. To clarify, 2 full payments for all properties financed.
EMPLOYMENT HISTORY - minimum 2 year employment history is required for a borrower to be eligible.
Vino Alonzo, Loan Officer
First Cal Mortgage