Financing Question on DTI

[Vik C.]

Hey guys,

I own my own place in NYC with a hefty mortgage payment and building maintenance/tax fees etc. I have no other debt.

Currently my DTI, if I include the mortgage and the full maintenance monthly fee for my building (which includes my property taxes) is 24%. I can probably squeeze out about $700 more of second/third mortgages before I hit 30%, if I assume my rental income will not be counted at all..

That said, is 30% DTI kosher? Will I be able to find lenders who want to loan to me (out-of-state, btw)? I have excellent credit, etc. etc. The gorilla in the room here is the notion of selling my apartment and unlocking a good chunk of capital to play with without worrying about lender's turning their nose up at my DTI. But right now, I do not want to sell so am trying to understand how much leeway I have.

Short Version: How high of a DTI can I be at until lenders will stop providing me conventional loans for rental properties, assuming an 800 FICO score?

Thanks guys. Just trying to set some realistic early goals for myself and the first step is understanding how much leverage i will have to play around with before I have to consider liquidating the assets I am currently sitting on.

[Jon Holdman]

Lenders will go up to 45%.  I've heard numbers as high as 50%.

Once you have two years landlord experience then lenders will include the rental income. For existing properties they look at your tax returns for actual income. For the new loan they look at the estimated rent, multiply by 75% and subtract PITI.

DTI with rentals works differently than other debt. If net rental income is positive, it adds to your income and improves your DTI vs. your baseline DTI (which ignores the rentals completely.) If net rental income is negative, only the negative amount adds to the debt side of the calculation.