Rental income on debt to income ratio

[Navid Saless]

Hey everyone, I’ve got a few questions about how rental income is handled on my debt to income ratio. If I buy my first property and rent it out, let’s say for $2,400 per month and my monthly mortgage, tax, insurance, etc is $2,000 month.

My first question is, if I have a lease and the property is rented, do they subtract the entire $2,400 from my monthly debt, or do they only subtract 75% of the $2,400?

My second question is, if I am able to write off close to or the entire amount on my taxes, does that affect how much the lender takes off my monthly debts or do they only care about the actual rent, not what is on my tax returns?

The following example is how I understand this all works, and I want to be sure I am correct.

My rent income is $2,400 per month and my expenses for mortgage etc is $2,000. I am effectively making $400 per month but let’s say I am able to write off 2,200 of the 2,400 on my taxes. But in the lenders eye, I have a net income of $400 per month on this property no matter what I put on my taxes which lowers my debt to income ratio, allowing me to be approved for a higher loan in the future for my personal property.

Thanks in advance!