Posted by lLinda Banasiak on November 15, 2006 at 16:27:50:
I have clients looking at a luxury duplex. It is priced at 494,500. What is the ratio for figuring out what they should pay versus the rent received? Income for the year I have been told should be 10% of the purchase price. Is this before expenses? Is this ratio correct?
Debt ratios for Rental Propert Purchase… - Posted by jason
Posted by jason on August 23, 2005 at 16:10:42:
I am looking at purchaing a Rental Property (duplex perhaps). I will be putting down 20%. My question is…When qualifying for the mortgage for the rental property, how does the current mortgage on my own residence figure into my debt ratio calculation? Example: if my loan+taxes+insurance = $1000 is the 1000 used in my debt ratio - or - just the loan payment and not the taxes and insurance - or - does any of it count at all?
Re: Debt ratios for Rental Propert Purchase… - Posted by Tim
Posted by Tim on August 24, 2005 at 22:13:20:
I just bought a house a few weeks ago, and they would NOT count any potential rent as income to offset the mortgage payment. Looking back, with some input from this message board, the property was financed in a manner similar to how a vacation home would be financed. In other words, the payment was added to the payment on my home to calculate my debt ratio.
It looks like the lender should have had me get an appraisal that determines the rental value. 75% of this rent should be matched against the payment, with any difference (+ or -) added to my income.
I guess the broker either did it wrong, or didn’t have access to a program that would be best for me, and didn’t want to admit it.
Great question.
Re: Debt ratios for Rental Propert Purchase… - Posted by ZACH
Posted by ZACH on August 23, 2005 at 17:25:36:
They will figure in your whole payment for your primary, PITI. Only 25% or equivalent of the new investment property will count towards your debt. Most lenders will look to keep you under 50-55%DTI Any other questions send me an email.