Are lenders able to use market value rent to calculate DTI

[Dustin Hedrick]

Hi everyone, 

I have bought a triplex and am looking to refinance. The rents are below market value and I cant renew their lease until August. I would like to refinance before then. Just wondering if lenders are able to calculate market value rent as opposed to the rent we are actually receiving. 

Thanks,

Dustin Hedrick

[Stephanie Medellin]

@Dustin Hedrick  If this property is already being reported on schedule E on your taxes, the rental income will be calculated from Schedule E.  If you purchased it recently and it's not yet on your taxes, then 75% of the lease will be used.  You won't get credit for a higher market rent if the tenants aren't paying that amount yet.  That being said, this doesn't mean you won't qualify for a refinance.  As long as your overall debt to income ratio is sufficient, rental properties can show a loss and you can still be approved.