We refinanced our SFR rental property in December.
I believe that we needed about 70% LTV (30% down) for the best rates (we have nearly 50% equity, so I don’t know the exact cutoff), but I think you can go to 75% LTV (25% down), and not suffer signifcant rate increases.
We paid about 1 extra point to get the same rate you could get at the time for owner occupied. Our rate was below 5%.
In our case, the income requirements were still pretty ridiculous (~ 50% DTI or more was allowed), so we did not even have to include the income from the rental to qualify. Our lender told us near the end of the process that this requirement was becoming more stringent, however.
Here’s what I would use for rules-of-thumb:
1. assume 25% down payment
2. Assume rates 0.25% above onwner-occ.
3. Assume you need to have a DTI below 45%, excluding the rental income from your income calculation (but including the loan PITI)
I am not sure if/how rental income would be included in today’s market for purchase. In the old days (before 2003) a rental agreement was sufficient. But I think there are more restrictions now.
