How Does HELOC affect Lender Debt-to-Income requirements?

[Matt Leber]

Hello All,

My wife and I have recently started the process of applying for a fixed rate (4.5%) HELOC with $100K limit with a draw period of 10 years. We own a primary residence and 2 rental properties. The reason we wanted to open a HELOC is to give us flexibility and piece of mind in case major repairs come our way or if we spot an opportunity to buy a property that needs some work. We intend to keep the balance on this HELOC at $0 more often than not.

I spoke to my mortgage originator and asked him about Debt-to-Income requirements for their conventional loans. He told me that they start to balk once the client's DTI reaches 45%, making it harder to qualify. I asked him if having this HELOC sitting off to the side at $0 balance is going to negatively affect my DTI and his answer to me was "it will not negatively affect your DTI % unless you borrow against it and have a payment scheduled."  Does this answer check out?  It seems that I've read conflicting forums on the subject.  

Again, we plan to have 20% down plus closing $ in our checkings/savings accounts for our next property purchase - without having anything borrowed from the HELOC. Am I hindering my borrowing power & negatively impacting my DTI by just having the HELOC available?

Thanks in Advance,

Matt 

[George Despotopoulos]

It shouldn't be counted if there's a $0 balance.