Besides that, most lenders would require a debt service coverage ratio of at least 110%, meaning the net income would have to be 10% higher than the mortgage payment.
Bugs – Is this 110% rule for commerical loans (e.g. more than 4 units) ? Last time I bought a SFR rental property (2002) this was not a factor(full doc loan).
The loan underwriting guidelines were based on my entire Debt-to-Income, not the individual property’s ability to cover the debt attributed to it. As long as my total DTI was below 36% I got decent terms (6.375% 30-year fixed …about 0.25% above owner occ at that time).
