Question for lenders (or anyone). On an owner occupied 4-plex do all lenders calculate the debt/income the same way? Would the entire PITIA go against the borrower as housing debt, Then use positive cash flow plus add backs (depreciation, interest, taxes, etc.) as income. I wish there was a lender who would subtract the cash-flow from the housing debt instead.
HUD determines the guidelines for how the income is qualified, so any lender who underwrites FHA loans must adhere to that methodology.
Your DTI is based on the cost of homeownership of the property, including:
1) principal & interest
2) property taxes
3) hazard/homeowners ins.
4) mortgage ins.
5) secondary/other financing
6) condo/HOA fees
On a multiunit property, you can use 70% if the rental income from the other units, assuming you don’t have a 2+ year history of rental income on your tax returns. The rental amount is determined by either a signed lease, or rental value as determined by an appraiser.
@Brett Robinson You can use the a portion of the rental income as part of your income on a new purchase. FHA also has a rule called "Net Self Sufficiency" meaning the total mortgage payment must be less than the total rental income on the property. If it does not pass this test then you will need to go conventional.
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