House Hacking -- what did we do wrong?

[Tina Felix]

Hi guys.

So we've done the house hacking thing (bought a duplex for our first house and lived in one side while renting out the other) and now trying to purchase our second property isn't going as we imagined. Our first property is in San Antonio and our second property will be in the suburbs of Philadelphia to be closer to my parents but we're finding it difficult to get approved for a loan for the second house because our DTI isn't good (thanks to the monthly mortgage payment of the first house with a two-year average of rental income from only one side instead of both).

I want to know if we are the only ones who have run into this problem. Also, ideas on how to deal with it as best as possible.

Thank you!!

[Matt Devincenzo]

Get a different lender. They should be adding the rental income for the 2nd unit to further offset your DTI. You don't need 2 years of income to count it, you can also count 75% of either FMV rent or actual lease rent if you've already rented it. The 2 year is IF you have it on tax returns. These are conventional loan guidelines, so they can add it. If they're not its either because they're not paying attention, or they have an internal overlay. Either way get a lender that is paying attention and will UW to the guideline.