All Forum Posts by: Andre Chouinard
Andre Chouinard has started 3 posts and replied 7 times.
Post: How is a HELOC factored into DTI for future mortgages?
- Posts 7
- Votes 0
Originally posted by @Kyle J.:
@Andre Chouinard It depends on the bank. At some banks a zero balance wouldn't count at all against your DTI.
Some banks have overlays and figure it differently though.
Here’s another thread on where someone asked the same question: https://www.biggerpockets.com/forums/49/topics/532050-how-does-heloc-affect-lender-debt-to-income-requirements
Depends on the bank and their possible overlays - got it. Thank you for the help.
Post: How is a HELOC factored into DTI for future mortgages?
- Posts 7
- Votes 0
Originally posted by @Shaun Weekes:
Originally posted by @Andre Chouinard:
I am pursuing a HELOC of $65,000 on my owner-occupied duplex and was wondering how this will affect my DTI ratio when applying for future mortgages.
For normal consumer credit cards, the lender adds up the minimum payments and adds it to the debt portion of the DTI ratio. For my pending HELOC, what amount will future lenders include in their calculation of my DTI when applying for mortgages on different properties?
For example, if I have a zero balance on the HELOC, how do they estimate my payments and factor that into the ratio? If I do have a balance, will they use my current interest payments as my debt obligation or will they pretend the interest rate is maxed out?
Any (detailed) information that people have to clear this up for me would be appreciated, thank you for your time.
The Underwriter will base make their calculations based on the entire line being used. So, if the payment is $150 on the entire 65K then that number will be added to your total debt payments.
I hope this helps and have a great day.
Just to be clear; If I have a zero balance will the underwriter calculate my payment for $65,000 drawn and the maximum interest rate?
Post: How is a HELOC factored into DTI for future mortgages?
- Posts 7
- Votes 0
I am pursuing a HELOC of $65,000 on my owner-occupied duplex and was wondering how this will affect my DTI ratio when applying for future mortgages.
For normal consumer credit cards, the lender adds up the minimum payments and adds it to the debt portion of the DTI ratio. For my pending HELOC, what amount will future lenders include in their calculation of my DTI when applying for mortgages on different properties?
For example, if I have a zero balance on the HELOC, how do they estimate my payments and factor that into the ratio? If I do have a balance, will they use my current interest payments as my debt obligation or will they pretend the interest rate is maxed out?
Any (detailed) information that people have to clear this up for me would be appreciated, thank you for your time.
Post: Owner occupied duplex DTI calculation for HELOC
- Posts 7
- Votes 0
Originally posted by @Shaun Weekes:
Originally posted by @Andre Chouinard:
Hi everyone,
I have been owner occupying a duplex (renting out one full unit plus spare bedrooms) in Dover, NH since 2016, get rents totally $3440 monthly, seen great appreciation on the property value, and want to open a HELOC secured with the property.
The complication I am dealing with involves my debt to income ratio and how it is calculated. I can not seem to find any solid guidelines on how I should make the calculation accurately given my situation. For example, it is my understanding that my mortgage taxes and insurance go into the numerator of my DTI ratio; In my case this totally dominates the numerator as I do not have any other significant debts. The complication now comes with calculating the denominator, my income. I have good w-2 employment- that's easy- what about my rental income? Can I include my total gross rental income? Gross from the fully rented unit? Total gross minus expenses? What expenses?
My primary expense is mortgage taxes and insurance, Since that is added to my numerator (debt) wouldn’t it be foolish for it to subtract from my denominator (rental income) as well?
If anyone can help me straighten out this calculation it would be greatly appreciated. I have a good understanding of the rest of the process and don't have any problems with the collateral portion of the loan, but I am concerned that my DTI could give me problems depending on how much rental income the will count/ what expenses they add to my debt or subtract from my income. Thanks for the help!
In your case you're going to need your schedule E to figure out you DTI. Whatever line 21 is you'll be able to add back line 18, 16, 12 & 9. Then divide that number by your rental months and add that positive or negative number to your additional income. For your W2 income there's about 3 different ways to calculate this but just make sure you're not adding bonus or OT if you haven't been receiving it for 2 years.
The rest you seem to have down.
Make sure you use a loan officer or broker that is familiar with investment type loans. This way you don't have to think about this stuff to hard.
I hope this helps and have a good one.
Thanks Shaun, this was very helpful
Post: HELOC debt to income ratio calculation and NH lenders
- Posts 7
- Votes 0
Thank You for your response, do you know if they will take 70% of the income I get from the fully rented unit or 70% from my total rental income (including spare bedrooms)? I have heard elsewhere that "spare bedroom" rent is not included in DTI even if I have leases.
Post: Owner occupied duplex DTI calculation for HELOC
- Posts 7
- Votes 0
Hi everyone,
I have been owner occupying a duplex (renting out one full unit plus spare bedrooms) in Dover, NH since 2016, get rents totally $3440 monthly, seen great appreciation on the property value, and want to open a HELOC secured with the property.
The complication I am dealing with involves my debt to income ratio and how it is calculated. I can not seem to find any solid guidelines on how I should make the calculation accurately given my situation. For example, it is my understanding that my mortgage taxes and insurance go into the numerator of my DTI ratio; In my case this totally dominates the numerator as I do not have any other significant debts. The complication now comes with calculating the denominator, my income. I have good w-2 employment- that's easy- what about my rental income? Can I include my total gross rental income? Gross from the fully rented unit? Total gross minus expenses? What expenses?
My primary expense is mortgage taxes and insurance, Since that is added to my numerator (debt) wouldn’t it be foolish for it to subtract from my denominator (rental income) as well?
If anyone can help me straighten out this calculation it would be greatly appreciated. I have a good understanding of the rest of the process and don't have any problems with the collateral portion of the loan, but I am concerned that my DTI could give me problems depending on how much rental income the will count/ what expenses they add to my debt or subtract from my income. Thanks for the help!
Post: HELOC debt to income ratio calculation and NH lenders
- Posts 7
- Votes 0
Hi everyone,
I have been owner occupying a duplex (renting out one full unit plus spare bedrooms) in Dover since 2016, get rents totally $3440 monthly, seen great appreciation on the property value, and want to open a HELOC secured with the property.
The complication I am dealing with involves my debt to income ratio and how it is calculated. I can not seem to find any solid guidelines on how I should make the calculation accurately given my situation. For example, it is my understanding that my mortgage taxes and insurance go into the numerator of my DTI ratio; In my case this totally dominates the numerator as I do not have any other significant debts. The complication now comes with calculating the denominator, my income. I have good w-2 employment- that's easy- what about my rental income? Can I include my total gross rental income? Gross from the fully rented unit? Total gross minus expenses? What expenses?
My primary expense is mortgage taxes and insurance, Since that is added to my numerator (debt) wouldn’t it be foolish for it to subtract from my denominator (rental income) as well?
If anyone can help me straighten out this calculation or recommend any flexible lenders on the NH seacoast it would be greatly appreciated, thank you.