Debt to Income Question

[Matt Schreiber]

Here is my situation. My rent in New York City is $2,400 per month. I split it with my girlfriend but the lender said the full $2,400 counts against me as debt, then I own two rental properties which I just purchased that add another $2,000 to my monthly debt. I make around $10,000 per month and this puts my monthly debt at $4,400. I am trying to purchase a cabin in Gatlinburg. I have enough capital to make the purchase but I can only handle another $600 per month in overhead to keep me under 50 percent debt to income ratio. Is there anything I can do outside of making more monthly income? Both rental properties I purchased don't have tenants in them yet so I guess after the New Year, I can start to show the rental income as additional income but I am wondering how I can keep purchasing properties unless I can show crazy high monthly income. Thanks for your help. 

[Cameron Tope]

Hey Matt,

Are you and your girlfriend both on your lease? If not, maybe you can add her and get the lenders to approve $1,200 against your DTI.

The other way to reduce DTI is to get year leases on your rentals. If your properties cash flow then your DTI will get better as you purchase more rentals. Be cautious: most lenders only accept ~75% of the rental income against your DTI. So if you have a rental bringing in $4,000/mo gross rent then you can only count $3,000/mo towards your income.

Hope that helps!