DTI Ratios For FNMA Loans When Borrower Has Rental Properties

[Bryan Hancock]

Okay...With all of the threads going around about FNMA properties 5-10 I wanted to clarify how "DTI" is calculated for rental property for both the front-end and back-end ratios for:

1. Rental Property With Mortgages On Your Credit Report
2. Rental Property With Mortgages Purchased Subject-To
3. Conforming Loans
4. FHA Loans
5. Purchase Money Versus Refinance Money
6. Properties 1-4 Versus 5-10
7. Portfolio Loans On Your Credit Report
8. Commercial Loans On Your Credit Report (personal guarantee)

I don't think that item 5 or 6 matter, but I wanted to ask just to make sure. I guessed on items 7 and 8. Here is what I think happens:

1. Count 75% (non-FHA) of gross rents in "Income" for both ratios
2. Doesn't count at all for either debt or income for both ratios
3. Count 75% of gross rents in "Income" for both ratios
4. Count 85% of gross rents in "Income" for both ratios
5. Rules don't change for refi versus purchase money
6. Rules don't change for properties 5-10 versus 1-4
7. Doesn't count at all for either debt or income for both ratios (not sure about this one)
8. Doesn't count at all for either debt or income for both ratios (not sure about this one)

Any clarity that our lender wizards can provide is appreciated. It is completely nonsensical that these ratios are used to me given that 15% and 25% are very skinny and seem to be completely arbitrary. I guess maybe the lenders are just looking at vacancy for the debt service or some such. I would never have thought a simple DTI calculation would be so involved :D