Debt-to-Income 2nd property

[Igor Messano]

Hi everyone,

I have a question regarding calculating debt to income for lending purposes. I always calculate my own debt to income so I know which lenders I shouldn't waste my time with and whether I could close close to getting lending in the first place. When calculating debt to income for a property that is under current lease, most lenders let me use 75% of the rent income.

What I was doing was adding 75% of rent to my monthly "income" column and the PITI to the "debt" column. When I noticed that my calculated DTI ratio was higher than the lenders calculation I asked some questions and turns out that what he was doing was adding the net rental income to the income column only which looks much better for debt to income.

What have been your experience with lenders calculating your DTI? Does this work the same way when buying a second property and looking at the rent and PITI of already owned properties?