1st Home Rented Out, Purchasing 2nd Home - What's The DTI Ratio?

[Jason Biggs]

I've tried searching everywhere and can't seem to find a straightforward answer. I'm currently living with family in their large home, so my 1st home has been rented out for a few years. Mortgage is $1,400 and rent income is reliably at $2,700. My monthly gross salary is $13,000, and have no other debt. I'm now looking to buy a 2nd home with $3,000 mortgage payment. So what's my final DTI here?

• Is it 28% ($1,400 + $3,000) / ($2,700 + $13,000) [1st mortgage in numerator]
• Is it 21% ($3,000) / ($2,700 - $1,400 + $13,000) [1st mortgage netted against rent income]
• Is it 23% ($3,000) / ($13,000) [rental property income and mortgage excluded altogether]
• Or is it something else entirely?

Help, please.