Robert McLister·General·September 18, 2010Rental Add-Back “Rental add-back” is the percentage of rental income a borrower receives that the lender is willing to use to qualify him/her for a mortgage. Rental add-back can range from 50%-100% on conventional mortgages. This percentage of rental income is added to the borrower’s income to determine his/her debt ratio. Here’s an example of how rental add-back is used to calculate a borrower’s total debt service (TDS) ratio: ___ __________ PITH + Other Debts___ _________Borrower’s Income + ( Rental Addback x Rental Income ) PITH = Principal, interest, property taxes, heat, and 1/2 of condo fees. PITH generally takes into account housing costs from all the borrower’s properties. Keep in mind, lenders have many different forumulas for calculating debt ratios with rental income, so check your lender’s guidelines. Like news like this?Join our CMT Updates list and get the latest news as it happens. Unsubscribe anytime. SUBSCRIBE! Thank you for subscribing. One more step: Please confirm your subscription via the email sent to you.