DTI Calculations for New Loan

[Shane Elias-Calles]

Hey BP,

I'm running into some DTI Road blocks and am looking for some help. I was under the impression that if you buy a new rental and the debt service coverage is substantial enough, then the DTI is essentially a net zero.

Also when lenders are looking at tax returns, if depreciation is causing a loss to be shown on a tax return, is the depreciation expense added back when calculating DTI?

Thanks

Shane

[Jay Hurst]

Quote from @Shane Elias-Calles:

Hey BP,

I'm running into some DTI Road blocks and am looking for some help. I was under the impression that if you buy a new rental and the debt service coverage is substantial enough, then the DTI is essentially a net zero.

Also when lenders are looking at tax returns, if depreciation is causing a loss to be shown on a tax return, is the depreciation expense added back when calculating DTI?

Thanks

Shane

 If your LO does not know how to calculate rental income from your tax return you need to find a new lender quickly. It is 101. Depreciation should be added back You simply follow this form using your schedule E: Rental income worksheet