bigg92, Home Buyer in San Antonio, TX

Is it possible to get a mortgage on 20K a year for a rental property no current debts, and have a 25% down payment?

Asked by bigg92, San Antonio, TX Thu Jun 5, 2014

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Hi bigg92,

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
NMLS# 184279
First Cal Mortgage
210-685-7642
valonzo@firstcaltexas.net
2 votes Thank Flag Link Thu Jun 5, 2014
Probably not, unless the income to debt ratio of the borrower, including the new mortgage debt can be supported by the borrowers current verifiable income! Banks want to know that your income can pay all of your bills without factoring in for rental income. Vacancies in rental units can cause you to fall behind in the mortgage.
0 votes Thank Flag Link Thu Jun 5, 2014
Wait...I think I misread the question...do you have 20k of income, or is the property priced at $20k?
0 votes Thank Flag Link Thu Jun 5, 2014
Possible? Yes, but likely very difficult. Most lenders don't want to go through all the paperwork and headaches for a loan of just $15k. If I were you, I'd look for a private-money lender. Best of luck...
0 votes Thank Flag Link Thu Jun 5, 2014
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