DTI Issue: House Hacked Rentals to Purchase SF Primary

[Dillon O.]

Looking for advice on how to navigate this unexpected scenario.

My wife and I own 2 duplexs we acquired with owner occupied financing and house hacked/fixed up. Both are in our personal name. Living in the 4th unit right now and renting out the other 3 (that we already lived in and fixed up). We would now like to purchase a single family home and rent out the 4th unit we currently occupy.

The issue is, the lendor I spoke with is saying our DTI is maxed out hindering us from qualifying for a SF primary mortgage. Im a bit confused by this as the numbers im running seem to pan out and shouldnt cap us.

Here is the math:

Property "A" (side by side duplex) valued at $580K with 38% equity (owe $360K) on a 30 year fixed conventional with 2.8% Int rate - PITI: $2800/ month. Monthly rents: $2200/ each unit = $4400/month.

Property B (side by side duplex) valued at $600,000 with 20% equity (owe $480K) on a 30 year fixed 3.5% int rate. - PITI: $3100/ month. We currently live in one unit and the other rents for $2300. Our owner occ. unit would rent for the same when we (ideally) move out after buying a single family. Total (future) rents =$4600/ month.

The issue is that the lendor I spoke with told me our DTI is too high to qualify for a conventional 30 yr. mortgage on a SF (approx $450K budget) approximate PITI: $3500/month

Our combined W2 wages are $145K/ year or $12K/month 

Total monthly debts: $450 (car pmt) + $180 (student loan) + $370 (fixed rate/term heloc on Property A) = $1000/month

Credit scores are: 780-800

Considering the debt services on the duplexs are completely covered and then some by 75% of the rental income I don't understand how we wouldn't qualify for financing a single family to use as a personal residence due to DTI. We would prefer not to refi/restructure the financing on the duplexs as we have great rates and doing so would put us in a less favorable financial position.

How do we move forward to get a mortgage on a single family? 

Any insight or help is greatly appreciated!

[Matt Devincenzo]

Does your lender provide the DTI calc to you? If not see if you can get them to send it over to understand the issue.

The broker I use sends me a spreadsheet with all my info so I can see 'how' he has input it, which would help in a situation like this. The issue seems like they are adding all your debts and all your income to get DTI. But for rentals it should be rental income minus rental debt, and then that is added to your total income or debt to evaluate DTI.