Real Estate Investor DTI & Borrowing Power Calculator

Work backward from a target debt-to-income ratio to the largest investment-property loan you can carry. Enter your gross income, existing monthly debts, the expected rent and holding costs of the property you want to buy, your rate and term, and the DTI you are aiming for. The calculator shows your current DTI, the maximum principal-and-interest payment that fits, the loan that payment supports, and the purchase price that loan buys at 20% and 25% down.

What does "borrowing power" mean here?

It is the largest loan whose payment, after the lender's rent credit, keeps your total DTI at your target. On the default inputs — $10,000 a month of income, $1,700 of existing debts, a property renting for $2,200 with $400 of monthly tax and insurance, 7.5% for 30 years, and a 45% target — the calculator allows $4,050 a month of P&I, which supports a loan of about $579,221 and a price of about $724,027 at 20% down.

That figure is a ceiling set by underwriting math, not a recommendation. It assumes the property still rents for $2,200, which a $724,000 house would likely not, so always re-enter the rent that matches the price range you land in. All results are estimates for informational purposes only; your lender's figures will differ.

How does the calculator get the maximum loan?

Step 1: Your current DTI

Current DTI = existing monthly debts ÷ gross monthly income. On the defaults: ($200 cards + $400 auto + $300 student + $800 other mortgage) ÷ $10,000 = 17%.

Step 2: The rent credit

Rent credit = expected rent × rental credit %. The 75% default mirrors Fannie Mae's subject property rental income rule, which has the lender multiply gross monthly rent by 75% and subtract the property's PITIA. On $2,200 of rent, the credit is $1,650.

Step 3: The maximum P&I

Max P&I = (target DTI × gross income) − existing debts + rent credit − property tax − insurance − HOA

On the defaults: (0.45 × $10,000) − $1,700 + $1,650 − $300 − $100 − $0 = $4,050.

Step 4: Converting the payment to a loan

The payment is turned into a loan amount with the present-value form of the mortgage formula:

Max loan = Max P&I × [(1 + r)^n − 1] ÷ [r × (1 + r)^n]

where r is the monthly rate and n is the number of payments. At 7.5% for 30 years, every $100 of monthly P&I supports about $14,301 of loan, so $4,050 supports about $579,221.

Step 5: Price at 20% and 25% down

Max price = max loan ÷ 0.80 (20% down) or ÷ 0.75 (25% down). Those two down payments cover Freddie Mac's investment property LTV limits: one-unit rentals can go to 85% LTV, but 2–4 unit rentals stop at 75%, so the 25%-down figure is the one to use for a duplex, triplex, or fourplex.

Step 6: Pro-forma DTI

The tool then shows DTI after the purchase two ways: with the rent credit and without it. On the defaults the ratio is exactly 45% with the credit (by construction) and 61.5% without it. The gap shows how much your approval depends on the lender accepting the rent.

Worked example: a more typical first rental

Inputs

• Gross monthly income: $7,500
• Debts: own home PITIA $1,900, car $350, card minimums $75 = $2,325
• Target property rent: $1,900; tax $250 and insurance $110 a month; no HOA
• Rate 7.25%, 30 years, target DTI 45%

Calculation

1. Current DTI: $2,325 ÷ $7,500 = 31.00%
2. Rent credit: $1,900 × 75% = $1,425
3. Max P&I: (0.45 × $7,500) − $2,325 + $1,425 − $250 − $110 = $3,375 − $2,325 + $1,425 − $360 = $2,115
4. Max loan at 7.25%, 30 years: $310,037
5. Max price: $310,037 ÷ 0.80 = $387,546 at 20% down; ÷ 0.75 = $413,383 at 25% down
6. Pro-forma DTI: 45.00% with the credit, 64.00% without it

How the answer changes with each lever

Paying off the car loan adds about $51,000 of loan capacity — the same effect as raising the allowed DTI by about 4.7 points ($350 ÷ $7,500). At 7.25%, each $100 of monthly debt you eliminate adds roughly $14,659 of borrowing power.

Worked example: a duplex bought as a pure rental

A duplex changes two inputs: rent comes from both units, and the down payment must be at least 25% because 2–4 unit investment purchases are capped at 75% LTV.

Inputs: income $9,000 a month; debts of $1,900 (the borrower's own $1,600 rent plus a $300 car payment); two units renting for $1,350 each, so $2,700 total; tax $400 and insurance $180 a month; 7.5% for 30 years; 45% target.

1. Rent credit: $2,700 × 75% = $2,025
2. Max P&I: (0.45 × $9,000) − $1,900 + $2,025 − $400 − $180 = $3,595
3. Max loan: $514,148, or a price of $685,531 at 25% down

Now check a duplex the borrower can actually find at $420,000, which rents for the $2,700 entered. A $315,000 loan at 7.5% costs $2,202.53 a month; PITIA is $2,782.53. Net rental result: $2,025 − $2,782.53 = −$757.53, so total DTI is ($1,900 + $757.53) ÷ $9,000 = 29.53%. The borrower qualifies with ample room. The ceiling of $685,531 is irrelevant, because no $685,000 duplex in that market rents for only $2,700. This is why the price you test should always come with its own rent figure.

Which DTI target should you use?

Fannie Mae's debt-to-income ratio limits:

The agency guide has no separate investor ceiling. Lenders often impose their own 43%–45% overlay on rentals, so 45% is a sensible default. Use 50% only if your loan officer confirms an automated approval at that level, and remember that a 50% DTI leaves very little monthly slack.

The calculator's status badges use 36% (excellent), 43% (good), and 50% (caution) as breakpoints. Above 50% is shown as high.

Where the calculator simplifies the lender's method

Positive rental income. Fannie Mae adds a positive net rental result (75% of rent minus PITIA) to income and adds a negative result to debts. The calculator always subtracts the rent credit from debts. When the rent credit is smaller than PITIA, which is the usual case, the two methods produce the same DTI. When rent comfortably exceeds PITIA, the calculator slightly overstates borrowing power.

Management experience. Borrowers with less than 12 months of documented property management experience can use the rent only to offset the property's own PITIA. If that applies to you, make sure the rent credit you enter does not exceed the PITIA the tool reports.

Existing rentals. Lenders net each rental you already own, usually from Schedule E (rent minus expenses, with depreciation, interest, taxes, and insurance added back), then compare that to the payment. Enter only the net shortfall in "Other mortgage payments." Our DTI guide for real estate investors walks through that worksheet.

Reserves and PMI. The tool does not check reserves (Fannie Mae requires six months of PITIA for an investment property through DU) and does not add PMI. At 15% down, subtract an estimated PMI payment from the maximum P&I.

What counts as a monthly debt?

Include:

• Minimum payments on every credit card, even if you pay in full each month
• Auto, student, and personal loan payments
• Your own home's full PITIA (or your rent)
• Child support and alimony payments
• Net losses on rentals you already own

Leave out utilities, phone bills, insurance premiums not escrowed with a mortgage, and other living expenses. They matter to your budget but not to the ratio.

DSCR loans: when DTI does not apply

If the numbers above do not work, a debt service coverage ratio (DSCR) loan qualifies the property on its rent compared with its payment instead of on your personal DTI. DSCR loans are non-agency products, so the required ratio, down payment, rate, and prepayment terms are set by each lender. Select "DSCR Loan" in the calculator to see the relevant notes, and compare written term sheets before choosing one.

Use the result in the right order

1. Find the ceiling here. It tells you what not to exceed.
2. Price a specific property in the investment property mortgage calculator to get its exact PITIA, PMI, and lifetime interest.
3. Test the deal in the rental property ROI calculator. A loan that fits your DTI can still produce negative cash flow.
4. Read the full affordability walkthrough in how much mortgage you can afford for an investment property, which adds cash to close and reserves to the DTI math.