Lenders - Settle the score on DTI calculations!!!

[Ryan Randall]

So, I've seen posts run the gamut here on Biggerpockets when it comes to how Fannie/Freddie calculate your DTI including your rental properties.

Let's say, for arguments sake, I have 1 rental property which grosses $2k/mo in income, and has $1k/mo in expenses (for arguments sake, it nets $1k on tax returns). 

Let's say I also make $5000/mo and I have $2k/mo in fixed expenses.

So, lenders, how is my DTI calculated?

Is it  ($1000 + $2000) / ($5000 + $2000) or 0.42%?

Or is it ($2000) / ($5000 + $1000) or 0.33%?

Maybe it's just me, but I'm tired of these different interpretations of how DTI is calculated with rental income from Fannie/Freddie's guidelines. For me, I've assumed (and had my own lenders calculate) the second one or 0.33%. However, I see all kinds of different interpretations here.

I can't help but think that the folks pushing the first one are either doing so out of ignorance, or they are attempting to funnel folks into their own private lending programs out of "fear" that traditional conventional won't work.

Any help is appreciated, thanks.