Question about Debt to Income Ratio

[Daniel Alexander]

When determining "Debt to Income Ratio" do rental properties count towards that calculation.  I understand that for actual "Income" to count, it usually requires 2 years at minimum for rents to count as income, i get that.  I'm referring to the actual mortgage and if lenders include the debt into the calculation when the property has an active lease.  

Iv'e had some conflicting answers about this situation from lenders and hopefully i can get a clear answer. One lender told me that it has to be at least 2 years and another lender told me as long as i have an active lease, the lender will discount that debt (neither seemed confident in answer).

My situation:  I have a duplex that i own and i am occupying one of the units.  Will the full mortgage count towards that "Debt to Income" calculation or just half?  Help please and thank you in advance! 

[Chris Mason]

Originally posted by @Daniel Alexander:

Iv'e had some conflicting answers about this situation from lenders and hopefully i can get a clear answer. One lender told me that it has to be at least 2 years and another lender told me as long as i have an active lease, the lender will discount that debt (neither seemed confident in answer).

My situation:  I have a duplex that i own and i am occupying one of the units.  Will the full mortgage count towards that "Debt to Income" calculation or just half?  Help please and thank you in advance! 

 1st possible source of conflicting information: How Lender Overlays Kill Deals.

2nd possible reason: Frankly, a lot of lenders screw up rental income, and either stop you before submitting/preapproving, or alternatively you get that bad news phone call 1 week before closing. 

For an owner occupied multi-unit, the rental income is added to "income" and the full PITI counts as a monthly liability. The [ rent * 75% - PITI ] formula you often see posted on BP will not apply, as that is for investment properties, and this is owner occupied (for us it is either/or, for us there is no such thing as an "owner occupied investment property").

The owner occupied 2-4 unit math is not as generous as the investment property 2-4 unit math (offsetting via subtraction always works out better than offsetting via division), but it still "counts." Where that rental income number comes from depends: if you've had it long enough to appear on tax returns, we're going to look at the tax returns. If not, we're going to look at the lease and likely proof that you've been receiving that rent. I am confident in this answer, and you can view Fannie Mae's worksheets here for yourself if you wish.