Applyin for HELOC - can someone please help/clarify some things?

[Antonius Vaughn]

Hey BP long time lurker here! Need some help clearing up some question. I'm looking to get a HELOC to fund a separate addition that I plan to rent out.

I recently applied through a big bank and was declined due to high DTI but I don't think they took my entire financial picture into account...

I'm the owner of the house but my name is not on the mortgage - LTV is 30%, and I'm requesting a HELOC for 10% of the total value. My annual salary is ~10% of the home's total value, I don't have any debt with a 750+ credit score.

My question is, how does the DTI get calculated in my scenario? The bank said my DTI is 80%+ and I have no idea how they came to this figure. According to my calculations I should be at around 40% and that's IF you calculate me as responsible for the mortgage.

Is it common practice to count the original home mortgage towards my DTI even though I'm not on that loan?

Can someone please point me in the right direction? I have everything lined up for the home addition but need to secure funding. 

[Chris Mason]

HELOCs have no Fannie/Freddie specifying how the math is done.

Each HELOC bank makes up their own rules for how they calculate things.

There's a relationship between the rate/terms and how liberal or conservative their calculations are. For example up in my area, there's a bank doing straight up "stated income" for DTI (partying like it's 2004-2008...), but obviously their rate isn't the best, since it's priced according to risk.

Call around. Your go-to LO for the first position mortgage might be able to provide a referral.