Updated over 3 years ago on . Most recent reply
Using Rental Income to Offset DTI Ratio
Hello! I currently am house hacking a duplex in Indianapolis where I live on one side and rent out the other to cover my expenses. I have an FHA loan on the property and have lived there for over 1 year. I am looking to move out and buy another property, but have been unable to qualify for another loan due to my DTI ratio. My lender said I need 2 years of rental income for it to offset the debt.
If I were to move out and rent both sides out, the mortgage would be more than covered by rental income. Is there anything I can do to get approved for another mortgage apart from waiting another year to show the 2 years of rental income on my tax return? Thanks!
Most Popular Reply
Not a mortgage expert but if the borrower is new to the landlording business the banks want to see the rental income reported on the tax returns for at least 2 years. Once that happens they can count 70% of it in the DTI ratio.