DTI & Timing Refi and HELOC

[Dan Milinazzo]

I looked at several prior posts, but did not see one with enough of the same variables.  Hopefully someone can weigh in. 

I hold a primary and a 2-fam rental. I am looking to cash-out refi the 2-fam then pull HELOC from primary and 2-fam. Stacking these transactions will definitely impact my financial picture as viewed from the first lender to the last lender so I want to approach this smart. Here's the question.

For DTI, what do most banks use for "Income"? Paystub, AGI from prior year taxes, Gross Rental Income, Schedule E from prior year taxes?

If using Schedule E do they add back in PITI+Depreciation since PITI is already counted in Debt itemization?

My paystub does not truly reflect my annual bonus since its not a part of regular gross pay as it is a one time payment annually.  Obviously just using my gross income based on Salary paints a VERY different picture when it comes to Income if you roll in Bonus and Gross Rental Income.  We are talking a 20 point swing from what I consider "best" case to "worst" case calculations.

So, when I pull the trigger on the Cash-out refi my DTI will increase about 2 points. Depending on the criteria most banks use in calculating DTI this could have a negative impact on my potential HELOC applications.

Can someone shed more light on the income side of DTI?