Formula Needed for Fan/Freddie where Rentals are Only Income

[Tony T.]

Question: What are the exact calculations a bank makes for a traditional mortgage (Fannie/Freddie) for a refi of my non-occupied duplex if my only income is a 12-unit rental property (plus the duplex)?

The bank told me I can go as high as a 45% DTI ratio but I did not qualify! This seems hard to swallow since I have no personal debt with an 800+ credit score and no mortgage on my residence!

I have heard that income would be the taxable amount on schedule E (line 22) + depreciation, but if that's true, I would have qualified. I have 10+ years of schedule E's, so the bank used them.

12-Unit Schedule E Details (with line #s):
3.) 91,521 - Rents
5.) 58 - Advertising
6.) 5559 - Auto
7.) 3966 - Cleaning
9.) 1490 - Insurance
10.) 29 - Legal
12.)35,313 - Interest
14.) 8979 - Repairs
16.) 7766 - Taxes
17.) 9184 - Utils
19.)72,344 - Add Lines 5 thru 18
20.)14,554 - Depreciation
21.)86,898 - Total Expenses
22.) 4623 - Income
NOTE: P&I on this loan was $3103 last year but I just refi'd and is now $2590.

Duplex Details for the desired Refi (value = $175,000):
1515 - Monthly Rents (in current leases)

620 - New P&I payment on $117,000 @ 4.875%/30yr/0 points
145 - Monthly Taxes
45 - Monthly Insurance
-------------------------
810 - Monthly Obligation for the Subject Property

Can someone tell me what the calculations are to qualify me?

I found an old post by David Beard (thank you) stating:
Income = Taxable Income + Depreciation + Interest - (Principle & Interest).
Mine would be: 4623 + 14,554 + 35,313 - 37,236 = $17,254.

So if $17,254 ($1438/month) is the Income from the 12-unit and the refi'd duplex adds $1515 in rents, isn't my monthly income $2998? ...the $810 monthly obligation for the duplex is only a 27% DTI (810/2998)?

Is the above formula for a Freddie/Fannie loan correct or did the bank make a mistake? If the formula IS correct, I'm wondering if the bank mistakenly added the 12-unit's monthly obligation into the DTI ratio when if fact it had already been subtracted when calculating income?

Any insight is highly appreciated! -Tony