Today I learned that Citimortgage has changed their underwriting rules concerning how rental income is used to calculate the DTI ratio. Apparently this is a very recent change.
I was calling about a HELOC on my primary residence. I just wanted to have a credit line available should I need a source of quick funds. The quoted interest rate was 4.5% (prime minus 0.75).
Because I have more than five investment rental properties, I was told that none of my rental income but all of my debt service would be used in calculating my DTI. With this change, my DTI is greater than 1.00 and effectively disqualifies me as a borrower. If I had five or fewer rental properties with mortgages, then my rental income would have been used in the DTI calculation. Did not matter that our household taxable income is over six figures without including rental income.
I was talking to the loan consultant about a HELOC on my primary residence and did not get a chance to ask whether this same rule applied to purchase money loans or refinances.
Citimortgage holds the mortgage on my primary residence. I thought it somewhat disingenuous of them to send me a marketing letter telling me I am pre-approved for a $175K HELOC, only to tell me that I can’t qualify because I have too many investment rental properties.
I have a call in to another Citimortgage loan consultant. I am hoping that I can get someone that can find workarounds or exceptions to the new rule.
I also have a call into my bank to ask if they will match Citimortgage’s offer. They just might match a competing offer to keep my business even though I don’t have enough on deposit to be classified as an Elite banking customer.