High DTI Ratio with HELOC

[Devan W.]

Hi BP! Recently, my wife & I decided to get a HELOC on our rental property in hopes of buying more rentals. Our lender said $210k was the max we could qualify for considering the LTV and our DTI (now around 53% with HELOC).

So now we have two 15-yr mortgages (primary & rental) plus a HELOC counting towards our DTI. We both have excellent credit and no other debt besides our mortgages. Even though the HELOC has a zero balance, it still counts against our DTI as if we are utilizing the entire amount. Is financing another rental even an option for us at this point? Are we limited to buying a property with all cash from the HELOC? Are there any lenders that do not take DTI into consideration? Our plan was to buy several rentals by only putting 20-25% down but that doesn't seem like it's going to be an option now.

Also, the deals don't look as good when we factor in the 6.5% variable interest rate from our HELOC. Basically, a $100k deal would cost us $542/month in interest. Seems like it would be hard to cash-flow without using leverage. Do we just need to look for better deals?! 

Any suggestions? Thanks!