Success Stories

Outsmarting DTI constraints: A dual property purchase success

By Colin McMahon

June 19, 2023 3 min read

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Outsmarting DTI constraints: A dual property purchase success

Our client was no novice in the real estate market. Already owning multiple properties, he sought to add two more $250,000 properties in Orlando, Florida to his expanding portfolio. Referred to Milo by a realtor who'd previously worked with us on a multi-unit investment property deal, he approached us with his ambitious plan.

The main challenge? Purchasing two properties simultaneously while already owning several others poses a significant hurdle concerning the debt-to-income ratio (DTI). This ratio is a personal finance measure comparing an individual's gross monthly income to their monthly debt payments. For a prolific investor like our client, this ratio can become problematic due to the multiple mortgage payments factored in. Typically, mortgage giants like Fannie Mae and Freddie Mac prefer a DTI ratio of no more than 43% to qualify for a mortgage.

But this didn't deter us at Milo. We found a way around the DTI obstacle by focusing on the specific income generation of the two properties in question. Using the Debt Service Coverage Ratio (DSCR) loan, we underwrote the buyer based on each property's income generation. This approach allowed us to bypass the need to delve into his personal finances or overall DTI.

With a DSCR loan at 70% Loan-to-Value (LTV), we were able to close both properties at the same time. Our client could therefore expand his real estate investment portfolio as he intended, without his existing properties or personal DTI posing a barrier.

Are you a seasoned real estate investor looking to add more properties to your portfolio?

At Milo, we have the expertise to handle unique situations and can guide you through the process. Schedule a meeting with a Milo loan consultant today!

The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.

Author

Loan Consultant Sales Team Lead

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