Question - Debt to Income Help

[Paul I.]

Hello, If my business partner and I take a loan out on our LLC (50% ownership) will it show up on my personal DTI? Appreciate the help. Thanks...Paul

[Linda Weygant]

I have a couple of mortgages in my LLCs that I had to personally guarantee.

The mortgages are in the EIN of the LLC and do not show up on my credit report. However, you are required to disclose all debt for which you are personally responsible when you apply for loans.

It makes for some complications when it comes to new mortgage and I had to argue with an underwriter for a while that they needed to either not count the mortgage payment against me or, if they were going to, then they had to apply the entire Rental Income to my Income side instead of just the amount coming through on the K-1, since that mortgage payment is already subtracted by the time it gets to the K-1. Took a while to get him to understand it, but he decided to include the full rental income in my DTI and then subtracted out the K-1, which was very beneficial for me. Other underwriters might choose to go in the opposite direction.