All
Members
Companies
Blog
Forums
Podcast
Webinars
    User Log in  /  Sign up
  • Forums
    Newest Posts Trending Discussions Followed Forums Real Estate News & Current Events General Landlording & Rental Properties Buying & Selling Real Estate Deal Analysis See All
  • Education

    Read

    BiggerPockets Blog BPInsights: Expert Analysis Guides Glossary Reviews Member Blogs

    Watch

    Webinars Video Library Financial Independence Blueprint Intro to Real Estate: Rentals

    Listen

    BiggerPockets Real Estate Podcast BiggerPockets Money Podcast BiggerPockets Business Podcast Real Estate Rookie Podcast Daily Podcast (Audio Blog)

    Topics

    Business Operations Finance Finding Deals Property Management Property Types Strategy
  • Network

    Recommended Vendors

    Real Estate Agents Mortgage Lenders Hard Money Lenders Insurance Contractors Investment Companies Build Your Team

    Search

    Members Events Jobs
  • Tools

    Calculators

    Rental Property Fix and Flip BRRRR Rehab Estimator
    Wholesaling Mortgage Payment 70% Rule Airbnb

    Services

    BPInsights: Property Insights Tenant Screening Property Management Lease Agreement Packages

    New Feature

    BPInsights (beta)

    Quickly analyze a property address or ZIP Code to compare your rent in your neighborhood.

    Analyze a property
  • Find Deals
    Real Estate Listings Find Foreclosures External Link Ads, Jobs, and Other
  • Bookstore

    Real Estate Books

    Profit Like The Pros Bidding to Buy See all books

    Featured Book

    BiggerPockets Wealth Magazine book cover
    BiggerPockets Wealth Magazine

    Written by financial journalists and data scientists, get 60+ pages of newsworthy content, expert-driven advice, and data-backed research written in a clear way to help you navigate your tough investment decisions in an ever-changing financial climate! Subscribe today and get the Oct/Nov issue delivered to your door!

    Get the Magazine
  • Pricing
Log In Sign up
User
Quick search links
Podcast Hard Money Lenders Books Washington
ForumsArrowPrivate Lending & Conventional Mortgage AdviceArrowRent or Own while investing?
  • Newest Posts
    • Newest Posts
    • Unanswered Discussions
  • Trending
    • Top Discussions
    • Trending Discussions
  • Browse Forums
Search Nova
Create post

Rent or Own while investing?

8 Replies

  • Share on Facebook
  • Share on Twitter
  • Share on LinkedIn
Rotate Log in or sign up to reply
user profile avatar
  • Posts 16
  • Votes 4

Rick Roach
Rental Property Investor from Bixby, OK

posted over 3 years ago

I am currently renting and considering buying a primary residence. If I buy my personal liabilities go up and so does my DTI. Do underwriters favor someone who is renting when loaning on investment properties? In other words will it help my DTI and have a favorable impact on my ability to borrow for investing if I rent instead of buy a home?

Rotate Log in or sign up to reply
user profile avatar
  • Posts 2.2K
  • Votes 864

Antoine Martel
Rental Property Investor from Los Angeles, CA

replied over 3 years ago

Rick.

Underwriters will favor the person who has the lowest DTI. Whatever you can do to reduce that number the better.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 16
  • Votes 4

Rick Roach
Rental Property Investor from Bixby, OK

replied over 3 years ago

So does rent count on the DTI?

Rotate Log in or sign up to reply
user profile avatar
  • Posts 91
  • Votes 40

JingJing He
from Hayward, California

replied over 3 years ago

Rent counts. I think the ur lease agreement will be enough before tax return is due, but more than that u need the income to show on tax returns

Rotate Log in or sign up to reply
user profile avatar
  • Posts 16
  • Votes 4

Rick Roach
Rental Property Investor from Bixby, OK

replied over 3 years ago

Sorry I should have been more clear. I meant to say does my rent payment count as a liability on the DTI. From what I have read so far it looks like it doesn't. My thought is that if I rent instead of own a home it will allow me to borrow more money for investment properties. Is that right?

Rotate Log in or sign up to reply
user profile avatar
Check Rosette Top Subjects:
Team and Flipping
  • Posts 1.2K
  • Votes 857

Kevin Romines
Lender from Winlock, WA

replied over 3 years ago

@Rick Roach Your debt ratio is your debt ratio, no matter if your renting or if you own? If you will be paying less monthly by renting, then that will give you a better DTI or debt to income ratio.

When you buy a rental, depending on the cash flows from the property, it will either add to your debt ratio, stay the same or maybe even lower your debt ratio. Lenders look at rentals as rents X 75% minus PITI.

So if after that calculation, the number is a negative number, that would then add to your debt and raise your debt ratio. If the number is a positive number, then that adds to your income and lowers your debt ratio. 

You can count existing rents from a place your going to buy, or you can get a new lease agreement in place, collect the 1st month plus deposits and therefore count rents that way, or if the property is vacant and wont be rented before you close, the appraiser will assign a market rent's value on the appraisal and they will do the calcs off that. 

In one way or another, you going to be count rents to offset the PITI. The question is, how good of a job did you do buying the property and will it throw off a positive cash flow?

Rotate Log in or sign up to reply
user profile avatar
  • Posts 2.1K
  • Votes 2.0K

Mike H.
Rental Property Investor from Manteno, IL

replied over 3 years ago

Yes. Your rent payment will count as a liability in your DTI calculation.

So if you're paying 1,000 a month towards rent or you're paying 1,000 a month towards PITI on a mortgage, the DTI calculation would work exactly the same.

Basically, they're trying to find out what your living expenses are. So whether its rent or PITI they don't care. But they know you have to pay for housing no matter how you cut it so they're going to use that amount.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 3.8K
  • Votes 2.8K

Matt K.
from Walnut Creek, California

replied over 3 years ago

As a renter... I can tell you I've had zero problems getting loans. They probably won't even need your lease, just the amount and contact info for landlord or PM. If they don't ask for the contact info they will and it'll be a huge problem for them (they can't sell your loan w/ out it) as they need to verify the rent.

I'd suggest talking to a investor friendly lender and building that relationship while discussing your goals. They'll help you/point you in the "best" direction.... 

Rotate Log in or sign up to reply
user profile avatar
  • Posts 16
  • Votes 4

Rick Roach
Rental Property Investor from Bixby, OK

replied over 3 years ago

Thanks to all for your replies! It helps to get info from those who know!

Rotate Log in or sign up to reply
  • 1
Related Resources Private Lending & Conventional Mortgage Advice
Should You Buy Mortgage Discount Points?
How I Find Private Money Lenders to 100% Fund My Deals (& How You Can, Too)
Mortgage Interest Deductions 101: What You Should Know
Best Deal Ever: Making a Good Deal Great by Negotiating Seller-Held Terms
4 Golden Rules of Real Estate Investing
Resources Read, see, and learn more!
Link Real Estate Investment Calculators
Link BiggerPockets Blog
Link Path to Purchase
Link Mortgage Loans
Link Find a Contractor
Link Real Estate Agents
Link Hard Money Lenders
Link Real Estate Listings

Top Contributors

Stephanie P.
Stephanie P.
Washington, DC Mortgage Lender/Broker
9.29
Score
Chris Mason
Chris Mason
Oakland, CA
7.08
Score
Jeff S.
Jeff S.
Los Angeles, CA
4.63
Score
Ryan Copeland
Ryan Copeland
Columbia, SC
4.02
Score
Charles Carillo
Charles Carillo
North Palm Beach, FL
3.85
Score

Private Lending & Conventional Mortgage Advice Trending Discussions

  • Help getting a loan as a 1099 worker!
    8 Replies
  • Best Mortgage deals for Chicago 3 unit
    7 Replies
  • 5-10 properties/ mortgages at the same time
    5 Replies
  • Multifamily Loan- 6 Unit
    7 Replies
  • Am I qualified to become a Hard Money Lender?
    7 Replies
Log in Sign up

Log in

Forgot password?

If you signed up for BiggerPockets via Facebook, you can log in with just one click!

Log in with Facebook

Or
btn_google_dark_normal_ios Created with Sketch. Continue with Google

Let's get started

We just need a few details to get you set up and ready to go!

Use your real name

Use at least 8 characters. Using a phrase of random words (like: paper Dog team blue) is secure and easy to remember.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.

Or
btn_google_dark_normal_ios Created with Sketch. Continue with Google

Why create an account?

Receive a free digital download of The Ultimate Beginner's Guide to Real Estate Investing.

Connect with 1,000,000+ real estate investors!

Find local real estate meetups and events in your area.

Start analyzing real estate properties, we do the math for you.

It's free!

Explore

  • Membership
  • Community
  • Education
  • Marketplace
  • Tools
  • FilePlace
  • REI Resources
  • Perks
  • Glossary
  • Reviews
  • iOS App
  • Android App

Company

  • About Us
  • Press
  • Advertising
  • Careers
  • Stats
  • Contact Us

Important

  • Editorial Guidelines
  • Terms of Use
  • Rules
  • Privacy
  • FAQ

Social

  • Facebook
  • Twitter
  • YouTube
  • Instagram
© 2004-2021 BiggerPockets, LLC. All Rights Reserved.