Plenty of Cash and Cashflow, cant get a loan

[Jack Okada]

My fiance and I have a 3 unit rental building in Oakland. We are currently occupying one while we were searching for a SFR to move to. Total rent once we move out will be approximately $7k. The mortgage is 2700 + about $500 for property tax.

I have a SFR rental property with 11 years left on a 15 year loan. The mortgage is $2200/mo, and another $500 ish for property tax.. It pulls in $3200 month in rent.

For debt, we have one zero percent interest car payment with balance of 25k.  Outside of that, all we have is my student loans of around $30k at 4.5% interest. 

I tried to get qualified for a home purchase of $810k with 20% down at 3.875% interest and could not get qualified with a 50% DTI ratio....we were at like 52% or something.

The first problem is they count a 25% vacancy rate, which is absurd in the areas where our rentals are. The second issue is that (and we havent gotten here yet) is that they are even assuming a positive income from the rentals on my tax returns. My SFR rental is definitely not showing positive income, because....why would I want to pay tax?! So once they dig into my taxes, itll be even worse from a DTI standpoint.

This seems crazy to me as we make plenty of money to afford the mortgage, but the 50% DTI ratio requirement once you tack on rentals is crippling. $3500 a month in positive cashflow from the Oakland 3 unit and another $500 from the SFR plus our salaries which are more than enough to qualify for this house without the rentals.

Does anyone have advice on how to overcome this?  $800k for a single family house is BARELY in the median home value range in a small bay area city that is cheaper than where we are now...How are other people able to get a loan?