How is DTI Ratio Calculated for Buying Second Househack?

[Mohammad Fanaei]

I bought my first househack last year, and I am getting ready to make an offer for the second one. My question is about how the DTI ratio is calculated when I apply for the second mortgage. My understanding is that assuming that one has no debt other than the mortgage for the first househack, it is calculated as

(PITI1 + PITI2) / (Monthly Paycheck + 0.75*Rent1 + 0.75*Rent2)

Rent1 is the total rent collected from the first property assuming that you have moved out and have fully rented it, and Rent2 is the rent collected from the other units in the new multi-family property that you want to buy.

Is this correct?

The reason I ask is that a new prequalification letter from the lender has listed the maximum purchase price that results in a DTI ratio of 60% if I follow the above equation. I can't figure out how they are running the numbers so that I can put it in my spreadsheet and can figure out if each property on which I want to make an offer makes sense. I am looking at 2- and 3-family properties in towns closeby, where the taxes and rents are different, and do not want to ask the lender to run the numbers for every option.

If anyone can help me figure this out, I would greatly appreciate it.