DTI ratio - question for lenders

[Coleman Cox]

Hi All - looking for assistance from lenders on how my back-end DTI ratio will be calculated when looking for financing.

My situation is I'm living in the Bay Area of California and renting due to crazy high prices that don't make sense from a cash flow investing perspective. I'm seriously looking in to buying my first investment property out-of-state, but don't want it to negatively impact my ability to purchase a primary residence in the next 2 years (time period I've heard is required for banks to include your rental property income in the DTI calculation).

I have a few nuanced questions on the calculation:

- Is rent expense included as debt even though not technically debt?

- Is credit card payment included as debt even though I pay off in full every month and it is never true debt?

- Anything else non-standard that might be included as debt?

- Once rental property income is allowed as income for the calculation, is gross rent or NOI included?

- Confirm ~40% is the max back-end DTI ratio lenders are looking for.

Thank you!