Owner Occupied Question

[Nicholas D'Andrea]

BP Community,

I purchased a SFH in July 2021. Currently, I am house hacking. I found a deal where the numbers work for my second property. I do not have enough cash to put down 20% to use the second property as an investment property. I would need to put down 10-15% and owner occupy. Does anyone know of a way around the one-year owner-occupied clause in most mortgages?

Appreciate your comments.

[Chris Mason]

Quote from @Nicholas D'Andrea:

BP Community,

I purchased a SFH in July 2021. Currently, I am house hacking. I found a deal where the numbers work for my second property. I do not have enough cash to put down 20% and use it as an investment property. I would need to put down 10-15% and owner occupy. Does anyone know of a way around the one-year owner-occupied clause in most mortgages?

Appreciate your comments.

 It's kind of a gray area rule. If you purchased that first house in July 2021 with the intent of moving out in less than a year, that's fraud.

However, if you moved in with that intent to live there a year, and something came up that you didn't anticipate, there are three possibilities.

1) It sails through underwriting, they don't even notice. Can't really plan for this, the "spaghetti strategy" isn't great when there's an earnest money deposit on the line. Cleared to close.

2) They do notice, and ask you to document your unforeseen circumstance. You could not have anticipated that your mother 150 miles away got terminal brain cancer, necessitating that you move closer to her for her last 6-9 months alive, for example, or that there's mold that wasn't disclosed, which is making your pregnant wife ill. Or you got a job transfer across the country. Cleared to close.

3) They do notice, and you talk about house hacking and numbers and cap rates and all that. Loan denied.