Posted on: 15th Dec, 2009 09:50 am
My husband and I are in a position to buy 2 lots of property fairly cheap. The first property we are renting a house on (from my husbands parents) and the second has a house being rented. We are interested in buying both houses and also building a house on the 2nd houses extra property. We would like to maintain both current houses to rent as a source of income. Our problem is that due to our current career position we have high debt to income ratio.
My question is would the equity in the houses and the rent we could obtain be enough to qualify for a construction loan? I understand you probably need numbers to give me a good answer, but I guess I am kind of looking for information on how the rental situation/other property ownership could positively affect our ability to qualify for a construction loan.
My question is would the equity in the houses and the rent we could obtain be enough to qualify for a construction loan? I understand you probably need numbers to give me a good answer, but I guess I am kind of looking for information on how the rental situation/other property ownership could positively affect our ability to qualify for a construction loan.
Hi annyb,
It will be difficult for you to obtain a construction loan if your debt-to-income (DTI) ratio is high. A construction loan is short term loan and will have to be paid off once the construction work is complete. The lender offering the construction loan will want to know if you would qualify for a long term mortgage after the construction is complete. The lender knows that unless you qualify for a long term loan, there is less chance of the construction loan being paid off. So, if the lender finds your DTI ratio is too high, he would not want to offer you the loan.
It will be difficult for you to obtain a construction loan if your debt-to-income (DTI) ratio is high. A construction loan is short term loan and will have to be paid off once the construction work is complete. The lender offering the construction loan will want to know if you would qualify for a long term mortgage after the construction is complete. The lender knows that unless you qualify for a long term loan, there is less chance of the construction loan being paid off. So, if the lender finds your DTI ratio is too high, he would not want to offer you the loan.
It is difficult to qualify for construction loan than loan for existing home loan. Debt ratio, credit score and assets affecting factors.
You can use equity in your existing properties and the rental income to help qualify for a construction loan.
You can use equity in your existing properties and the rental income to help qualify for a construction loan.