DTI and rental income

[Joe Edwards-Hoff]

Hello all,

I have a pretty simple question. If I own a single home, and would like to move into another and rent the one I am in, is there any way to count the future rental income on my DTI? Or will that only work when I am theoretically moving from home 2 to 3 and then I can count the income from home #1?

[Jon Holdman]

What you will bump into is a problem caused by people who moved to a cheaper home, claimed the first one would be a rental, and then let it fall into foreclosure. Many lenders will require you have enough income to support both loans, without considering rental income. If you search around, you may find one who will let you count the rent. The will usually consider "net rental income" to be 75% of the rent less your PITI payment. Once you have two years tax returns with the rental income, most lenders will count it.