DTI, Conventional Loan, HELOC, Insanity

[Byron Broughten]

Hello!

I've been going slightly insane trying to figure out how debt to income ratio (DTI) factors into getting conventional financing or a HELOC on investment property. My current understanding is that cash flow positive investment property (not a primary residence) only adds to the income portion of DTI, at least according to investment friendly lenders.

So let's say that right now my only debt is from my primary residence, and it puts me right at a 43% DTI ratio—just below the cutoff for most conventional refinancing and HELOC. And let's say I kick off a brrrr—I buy, rehab and rent out a property. I know that without much rent history, lenders will only consider 75% of gross rent as income.

So can I take out a conventional investment loan on the rented out investment property so long as the PITI would be less than 75% of the gross rent? And if so, could I have been pre-approved for such a loan before buying the property, under the pretense that the property would produce so much gross rent?

Or can I get a HELOC for that same property so long as the property's PITI, if I were to max out the HELOC, would be less than 75% of the gross rent?

If the answers to these questions might be yes, how difficult is it to find lenders who would agree? And is it more difficult if I have only been a landlord for less than two years?

I would greatly appreciate any insight!