Circumventing DTI Requirements

[Brian Crutchfield]

Hi all. I posted this question in another post, but it seems I kind of "buried the lead" in a long post with details on my current situation, and no one felt like reading all the way to the end!

Quick background:

My wife and I are fairly new to REI. We moved out of our SFR and rented it out. We are currently "house hacking" a duplex. We plan to move out next March or so, and into a new SFR. If you're interested in the full background, check out this post:

https://www.biggerpockets.com/forums/12/topics/347...

My questions are:

1. How are people getting around DTI requirements once you start to own multiple properties? Will any lenders go to 50% these days?

2. Will lenders use rental income if leases are in place, without years of tax returns? I'm also reading that the rule of thumb is to use 75% of rental income to qualify for the next mortgage. Is this fairly standard practice?

Thanks to anyone who can provide any assistance. Also, any advice on what we have done so far (see linked post) is welcomed.

[Brie Schmidt]

@Brian Crutchfield

1. It is a fannie/freddie requirement, so basically impossible to get around. 

2. Yes, they will use the current income or projected income from the new property to help you qualify.  They will use 75% of gross rents on stuff you own and new stuff until you do your taxes on what you own already.  

So on the SFH they will count $1181 of rent minus the mortgage payment (my guess is $1300) so that will show a negative monthly income of $119

On the duplex they will use $1575 of rent minus the mortgage payment (my guess is $1425) so that will show a positive monthly income of $150

So in the end, you will show $31 of monthly rental income.

Add that to your current monthly income

Add in 75% of the rent from half the duplex on the property you are getting

And that will be the basis they will determine your DTI on.

If I am buying in A/B areas I find that my taxes reflect more income than the 75% of gross rents.  Here is a calculator my bank gave me on how they determine rental income based off my tax return

https://www.biggerpockets.com/files/user/chicagobr...