Question about qualifying for an investment property.

[Herm M.]

Let's say a person makes 11k a month and his/her monthly credit obligations add up to 5k monthly (this includes three mortgages). This person is essentially tapped out as far as debit:income goes.

This person wants to buy a duplex rental for $550,000. With 25% down , the loan amount is $412,500. The PITI comes out to $2800. The monthly rental income is $5300. The lender will give credit for 75% of that, let's say $4000/month.

As far as qualifying for a conventional loan at 3.5% goes, which of the following is true?

a) The lender will say that the building is self-sustainable because the $4000 rent covers the $2800 payment. The lender will give you the loan.

b) The lender will say that you are signing up for a new monthly obligation at $2800 and so you need to meet 45% debt:income and so you need $5800/month in additional income in order to get this loan. They'll give you $4000 rental credit and require an additional $1800 of monthly income.

I have heard mixed things on this. If b is the case above, then that disqualifies this buyer.