DTI on FHA loans

[Alejandro Valbuena]

Hey Everyone!

As someone saving for an investment property I am a little concern when it comes to the DTI. I am hoping to buy an investment property with an FHA loan, live in there for the first year or more and then move out and rent that property. Having said that, I also have a car at my name which makes my DTI lower when it comes to taking a loan. I am wondering what is the DTI maximum percentage on a FHA loan? What are some things I should be aware of when using a FHA loan? I am aware that the DTI on a conventional loan is around 36% but multiple sources have mentioned that for FHA loans the DTI is around 57%, how accurate is this?

Thanks everyone! Feel free to reach out to me for private conversation regarding investments or real estate in Miami!

[Darnell Lockett]

Hi @Alejandro Valbuena. FHA loans are for primary residences only. You wouldn't be able to buy an investment property using FHA. You can buy a 3-4 unit multi-family property using FHA, but you must reside in one of the units. You also have to keep in mind that when purchasing a 3-4 unit with a FHA loan, the property must pass the self sufficiency test:
75% of the total market rent (aka pro forma) for all the units has to be more than the total monthly mortgage payment. That total payment includes: principal, interest, taxes, mortgage insurance (PMI) and any other insurance (like homeowners insurance). If this metric isn't met, FHA can't be used. You can use A DSCR loan. It doesn't take into account your personal DTI. Income and debt service is based on the subject property. Btw..I see you're here in Miami as well. Hi! Feel free to reach out to me if you have any other questions.