Home Buying in Pasadena>Question Details

First Time B…, Home Buyer in Temple City, CA

What is the debt to income ratio?

Asked by First Time Buyter, Temple City, CA Thu Aug 15, 2013

If I'd like to refinance my 2nd property, what's the debt to income ratio? I have rental income to that property, would that be considered as income? I just got that place & therefore the income is not shown in income tax return yet.

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Not all lenders will give you credit for rent from recently acquired rentals but we will. You need a direct seller to Fannie Mae with no overlays and I can help you with that. Don't hesitate to call.
0 votes Thank Flag Link Thu Aug 15, 2013
For a newly-acquired investment properties, we can still count anticipated rental income, toward your overall income to help with your ratio. The rental income must be substantiated by present leases (and verify by the income approach survey by the appraiser)

0 votes Thank Flag Link Thu Aug 15, 2013
D.R. / Debt Ratio The customer's monthly obligations divided by their monthly gross income
but when working on refinances the debt to income ratio is not as simple as it sounds, as there are many factors that come into play.i.e. if you are W2 earner are you self employed ? the fact that you just got the property and have no income on your 1040's doesnt mean that you can't use that income. there are lenders that will allow you to use the income with i.e. rental aggreements, proof of rent.
If you have any questions i am more than happy to elavorate and help you out .

Celeste Licea
Platinum Home Financing
999 E Colorado Blvd
Pasadena, CA 91106
Direct 626.204.0030 ext 104
Cell 323.919.5660
Fax 323.843.9661

NMLS# 236409
0 votes Thank Flag Link Thu Aug 15, 2013
Your maximum allowable debt to income ration would dictated through the automated underwriting process when verifying whether your loan can be sold into the secondary market. Your max debt-to-income ratio is a piece of the puzzle which also include your credit rating, collateral, and your capacity to make your monthly mortgage payments; ....the standard max debt-to-income ratio can vary between 43 - 55 %

Now with regard to the rental income, you want to discuss that matter with your loan broker.

Do you think you need the rental income in order to qualify for the loan?

0 votes Thank Flag Link Thu Aug 15, 2013
DTI or Debt to Income ratio is your mortgage plus other monthly debt divided by your gross monthly income (if employed) or net monthly income (if you are self-employed).

Each lender has their lending guidelines re. how high DTI should go, so when you call on some good mortgage pro, you should ask them for DTI on your 2nd investment property.

Until 2 years passed and you can show profit, not loss on the property you are renting out, this won't be used as income. This property (until 2 years of profit could be demonstrated on your tax returns) can cause a loss, due to taxes, insurance and a mortgage (if there is a mortgage on it).

I suggest to speak to a couple of good mortgage pros who understand underwriting process and have been in business long enough to know how to put the deal together. A loan officer in a bank won't know how to help you - they are just sales people, no understanding of underwriting.

Some mortgage brokers or credit unions/local banks could be a good resource to check into.

It could be that you'll research and find a more flexible lender in your area.

Hope this helps,

Irina Karan
Beachfront Realty, Inc.
0 votes Thank Flag Link Thu Aug 15, 2013
Looks like you got your answer. If you are ready to refinance now, I can certainly help you out in that department. You can call me at 408-352-5147 or email me at AGreer@themortgageoutlet.com. You can check us out at http://www.TheMortgageOutlet.com. I will look at your situation and present you with some options.

Alex Greer
NMLS #1056079
0 votes Thank Flag Link Thu Aug 15, 2013
Debt to income ratio is the amount of total debt you have (car loans, mortgages, credit cards, etc) divided by your total income. Lenders look at this closely to hep minimize risk when originating mortgage loans.

Take care.
0 votes Thank Flag Link Thu Aug 15, 2013
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