Debt to Income Calculation

[Michael Osborne]

I currently have no debt except 2 mortgages that are on rental properties and plan to purchase a new primary residence soon. The mortgages on the rentals (PITI including HOA fees) are $4,451 monthly and monthly rent is $5,200. From what I have seen mortgage companies typically only count 75% of rental income as income, so that brings the income down to $3,900.

How does this look for DTI calculations?

Are the rentals looked at as a group, so in this instance a loss/debt of $541 ($4,451-$3,900 monthly), so DTI is calculated as ($541 loss + new primary residence expenses) divided by (rental income plus W2 income).

Or is DTI calculated as ($4,451 in rental expenses + new primary residence expenses) divided by ($3,900 in rental income plus W2 income)?