Check Lender’s DTI Math

[David Charlton]

Hello all,

I’m currently working with a lender to pull cash out of my primary residence via refi in order to fund the down payment on our next property. Our primary is a triplex where we live in one of the units. We also own a duplex that has been fully rented for one year this month. 

After her first review I was surprised to find that based on her math to calculate my DTI, I was SOL on affording much of a property. I was starting to wonder how anyone can build a portfolio, however after searching the forum for answers to this DTI challenge, I found an article with the following link:

Fannie Mae

If I read this page correctly, the PITIA should be deducted from my qualifying rental income prior to the DTI factor of 45% being applied, not afterwards.

This is not trivial as the difference is ~ $661 /month for my duplex alone for Scenario A

Below are a few snapshots of the lender’s math. 

Scenario A:

Scenario B:

Any answers out there? 

Bonus Points for anyone who can explain how my primary/triplex should be calculated.