Calculating DTI from W2 and STR
I am trying to calculate my DTI and am unsure if I should be adding in gross revenue from my STR that I have owned for less than a year. Not sure if I can add this in to lower my DTI or not.
Talk to a lender and send them all your docs. Different lenders calculate things differently so whatever you calculate yourself may be applicable to lender 1 procedures but not lender 2
@Jonathan Stevens as the other respondent mentioned; you're best step forward is to speak with a lender. They'll tell you how they'd calculate it. For the most part - the standard is that your lender will use what you claimed on your tax return and calculate your effective income from the tax return, taking in consideration when you purchased it, when you put in service, and how much expenses you claimed. And if you did not put the property in service in 2021 and this year will be the first year that you will claim it on your tax return, then most likely the lender will use the lease amount and discount it for vacancy purposes. For conventional loans, this would be 25% of the monthly lease. That is the amount that most lenders will use. Of course, if you don't have any primary home and this is the only property that you have then it really behooves you to speak with a lender that is familiar with agency guidelines (that is if you are looking for agency loans), as there are guidelines that both GSE's put in place and you want to make sure that you follow that. Of course, if you are looking to DSCR type of loans this may all be different. Hence, the recommendation to seek guidance from your trusted lender.
Good luck.
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Lender (#NMLS 199791)
- Vellum Mortgage, Inc
@Paul Defngin thank you for that input. Yeah I was looking to see what my options are for both areas.
@Sergey A. Petrov thank you for the input. I'll be reaching out to my lender.
Quote from @Jonathan Stevens:
@Sergey A. Petrov thank you for the input. I'll be reaching out to my lender.
Call several. There is little magic to this, just need to keep seeing who offers what and where you fit in unless you have a long term relationship with someone that can “do it all” and even then…
@Jonathan Stevens if you are pursuing a conventional loan I don't think you can use STR income from currently owner properties until/unless it hits your tax returns. However, you might be able to use the *potential income from your next acquisition* to help you qualify to purchase. You need a great lender like @Parker Borofsky in your corner. Good luck!
@Brian G. I actually used Parker to secure the loan on my current STR haha. She was great.