Question about DTI & Pre Approval

[Daniel Sabato]

Hello everyone, as with all my questions I’m coming straight to the place where I always find the best info! 

Just to give some background, I’m planning to buy a 2-unit house, bottom floor is a 3bedroom unit, upstairs is a 1 bedroom apartment. Ill have a few of my buddies living with me in the 3br unit (We’re young & not picky about space right now) & I’ll rent out the upstairs. With my friends living with me I’ll actually be living for free & cash flowing positively. They’ll be getting a killer deal as well! Nothing is ever 100% but I have tons of friends who would love the opportunity to live for fairly cheap so I have plenty of backup options in case someone bails!

Anyway, on paper for pre-approval it'll look like I'm living in the 3br alone & only renting out the smaller unit. This will make the mortgage look like a really large chunk of my income, lets say 75%. Now for pre-approval I'm in a pretty bad spot based on that. Has anyone encountered this or am I incorrect about how DTI is calculated? If the DTI is calculated seperate from the potential mortgage payments then Im rambling for nothing & theres no issue for me! My credits solid, I have no debt, stable & solid job, a decent savings that is growing well & my car is paid off!

Any suggestions or advice would be more than welcomed! When I run the numbers, & I run a lot of them, I’ll be cash flowing between $500-$600 a month with this property. I’m very conservative with my #s & I factor in expenses that most wouldn’t & things that are a 1/10 chance of happening! I like to over prepare & I select properties by calculating the worst case scenarios all around! 

Thanks everyone!