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Kyle Seidel
  • Rental Property Investor
  • Green Bay, WI
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50
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How I thought DTI was calculated is wrong?

Kyle Seidel
  • Rental Property Investor
  • Green Bay, WI
Posted Jul 18 2017, 14:08

Income: 

-$3,000 ($2,400 after taxes) salary

-$500 ($400ish after taxes) dividends/commissions

-$1,575 in rental income for my owner-occupied duplex

Debts:

-$950 mortgage for my duplex

-$50ish for min. c.c payment

How I thought figuring out DTI was: $3,000 + $500 + (1,575 * .75 - 950 = 231); since I have a positive cash flow I would have a DTI of 50/3,731 = 1%... Then with each cash flowing property I have my income would rise while my debt would stay very low

Questions/What I'm being told by my potential heloc lender:

1. Income is after taxes so $2,800 and not the $3,500 I was anticipating

2. They base it off of the last 2 years of Schedule E... Rents + Depreciation - Expenses... then the mortgage is added back to the debt??? That would mean I can't even get a 2nd property???

3. The only way I could see my mortgage getting added back to the debt is if  it's because it's owner-occupied? I'm hoping that she's wrong and that rental properties if they cash flow would be added to my income and the mortgage wouldn't be added to my debts?

4. She said we have to wait to see my exact debts until my credit is pulled... My only debts that occurr monthly are technically my mortgage which pays for itself and the minimum balance on my c.c. What else could they possibly count as debt from my credit report?

If you have answers to any of my questions or exactly how the DTI was figured out for you that will be helpful, thanks!

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