DTI...front end, back end, or both???

[Kathleen DeNault-Ridge]

I am trying to determine how much mortgage I can afford on a buy and hold property investment. I have a mortgage on my primary residence. My current overall DTI is OK (below 36%) but my front-end (house expense ratio) is a bit high (although still below 28%). Knowing that the potential rental income from the property will not factor into my income until, I think, it's 2 years of returns...I'm trying to determine the price range I should be looking at. I would probably go for conventional financing (no other mortgages except my primary residence and fulltime w2 employment)...what are lenders weighing more heavily, front-end or back-end DTI? If front-end DTI is the most important number, I will need to watch the amount of mortgage I take on as I close in on the 28%. What kind of DTI ratios are necessary in pursuing conventional financing for a rental property (maybe multi-family) in today's economy? Is 36/28 still the Fannie Mae "standard" with 20% down and good credit?