Not exactly an Irvine Realestate question but I had a debate with my coworker about whether rental income/expense are included in DTI calculation. Here is a senario. Which case is correct? I thought it was case 1 that lenders are using. Thanks.
Monthly income : $10,000
Rental prop expenses: $2000
Rental income per mo.: $2667
other debts : $1000
Goal: getting a loan from a lender with a favorable DTI
Case 1:
DTI = ($2000+$1000)/$12667 = 23.6%
Case 2:
Rentat expense is covered by rental income even with 25% vacancy rate.
DTI = $1000/10,000 = 10%
Monthly income : $10,000
Rental prop expenses: $2000
Rental income per mo.: $2667
other debts : $1000
Goal: getting a loan from a lender with a favorable DTI
Case 1:
DTI = ($2000+$1000)/$12667 = 23.6%
Case 2:
Rentat expense is covered by rental income even with 25% vacancy rate.
DTI = $1000/10,000 = 10%