Debt to Income

8 Replies

I currently rent myself but will be looking into my first investment property due lenders count current rent as a debt to income ration for loans? 

Not typically. Only items that are shown on the credit report are taken into the DTI ratio.

If you'll be looking to purchase a OO property they'll look at what the NEW debt will do to your DTI but otherwise yes your housing cost will be factored in.

@Phillip Gonzales  

If you move into an investment property, your current rent WILL NOT count.  

If you are buying a non-OO place, your current rent WILL count.

I recommend going OO for your first place. Here are 5 ways into your first place:

0% Down:
NACA (https://www.naca.com)
VA Loan (http://benefits.va.gov/HOMELOANS/index.asp) Rural Development Loans (Renovations MAY be included)
(http://www.rurdev.usda.gov/HSF-About_Guaranteed_Loans.html)

3.5% Down
FHA (http://portal.hud.gov/hudportal/HUD/topics/buying_a_home)

3.5% AND Renovations
FHA 203k loan (http://portal.hud.gov/hudportal/HUD/program_offices/housing/sfh/203k)

5% Down
Homepath Owner Occupied

As a renter the rent is not counted against you. If you owned your house than yes the mortgage would count against you.

Ok so I feel I am getting mixed answers some are saying yes and others are saying no?? This will be an investment property, but what if it were a primary home?  

If you live in the property (Owner Occupied), then the future mortgage payment (PITI) is included in your Upper Debt to Income Ratio (I think FHA limit is 43%). You also have a Lower Debt to Income Ratio (I believe FHA is 25%) that doesn't include your future mortgage payment.

If you don't live in the property, then the loan is based on the Loan-To-Value (LTV) of the loan amount compared to the market value of the property (usually no more than 65% - 70% LTV). They also look at your Debt to Income ratio, but I'm not familiar with those ratios for conventional investment property loans.

Best thing to do is to reach out to a local mortgage broker via your local Real Estate Investment Association.

God Bless You!

Ok that clears it up so much for me thanks guys my DTI is very low from what I have calculated which is 10%

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