First Time Investing- Effects on DTI

[Thomas Pellegrino]

Hello everyone, 
I've been looking to get into real estate for years!! I finally have enough money and a decent job after finishing my masters. I am having one small hurdle I for some reason can't figure out mentally. So here is my plan of attack; I do not own a primary residence home yet, I still rent. However, I am looking into investing in section 8 real estate (that doesn't really matter), and I want to invest before I purchase a multi-family with an FHA. My question is, if I purchase homes using a regular bank loan under my own name, information, etc, will this hurt my debt to income when I apply for an FHA, or is it going to help me if I am cash flowing. I truly don't know why I can't wrap my head around that. They'd take my income, then the real estate income, and take 43% of that then subtract my debts. Sorry if this sounds stupid, but this question is holding me back from investing before I buy my first real home.

[Jay Hurst]

Quote from @Thomas Pellegrino:

Hello everyone, 
I've been looking to get into real estate for years!! I finally have enough money and a decent job after finishing my masters. I am having one small hurdle I for some reason can't figure out mentally. So here is my plan of attack; I do not own a primary residence home yet, I still rent. However, I am looking into investing in section 8 real estate (that doesn't really matter), and I want to invest before I purchase a multi-family with an FHA. My question is, if I purchase homes using a regular bank loan under my own name, information, etc, will this hurt my debt to income when I apply for an FHA, or is it going to help me if I am cash flowing. I truly don't know why I can't wrap my head around that. They'd take my income, then the real estate income, and take 43% of that then subtract my debts. Sorry if this sounds stupid, but this question is holding me back from investing before I buy my first real home.

 @Thomas Pellegrino    If the rental income is not on your tax return you will be able to use 75% of the lease to offset the mortgage. So, if your mortgage payment (taxes/insurance included) is 750 and you lease is 1000 then the rent offsets your mortgage payment. In this case there would be no effect on your debt to income ratio at all. If the rental income is already on your tax return you would take your bottom line on your schedule C, add back depreciation then divide that number by 12.  Lets just say that equals you bringing in 700 a month with the same 750 mortgage payment. In that case it would effect your debt to income by 50 bucks a month.

Bottom line, if you are buying cash flowing properties then NO, you debt to income should not be materially effected in a negative way.