Deduction/depreciation and DTI

[Tim Lee]

Hi,

I recently heard that investors may not want to take too many deductions because that will affect their DTI and the ability to get loans. Can someone explain this in greater detail? Thank you!!

[Nick Belsky]

@Tim Lee

To expand a bit, Fannie/Freddie adds depreciation back to your income as well as mileage deductions.  Most anything else, will reduce your income.  So if you are showing $200,000 in revenue and $160,000 in total deductions/expenses, where $40,000 is depreciation... the calculation will be that your annual qualifying income will be $80,000 versus $40,000.

As also pointed out, Non-QM/Private lenders don't usually care about DTI, employment, or personal income.

Cheers!