Qualifying for mortgages on future house-hacking properties

[Account Closed]

Hi all,

So I've been doing a lot of reading, including just finishing Set for Life (great book).  Anyway, I plan on using the house hacking strategy to build my portfolio. I am aware that typically I have to stay in the home at least one year, and it will be two years showing up on my tax returns before I can use the income from the half of the duplex that I currently am living in to qualify for a future mortgage.

My question is in what way can this scale so that I can do it every year or so and still qualify for mortgages? How can I use the income of the unit that I am living in to qualify for a mortgage and what does this do to my DTI?

To me it seems like it will always add some to my debt load because the side of the duplex I am vacating will be counted as debt since I'm not currently renting it out (because I live there).  So basically each place I vacate will be counted as debt until I get it filled, which presumably would be after I get the new property. 

What sort of process or strategy have you used to scale a house hacking strategy in building a portfolio? 

[Carl Schmitt]

@Account Closed

I'm trying to clarify what your strategy is.  The way I'm reading it, you plan to buy duplex A and live in 1 unit.  In a year or so, buy duplex B and move in, rent out the now vacant unit in duplex A.  Rinse and repeat.  Am I understanding your plan correctly? 

If so, my understanding is you only need to worry about the first 2 years. Once you have 2 years of rental income on your tax returns, most underwriters will consider you an experienced landlord. From there, they will add 75% of expected future rents to your DTI ratio.

For example, let's assume your DTI is maxed out. the mortgage on your new property would be $1k and push you over the DTI limit. However, you have 2 units that will rent for $900 each. The underwriter can add $1350 (75% of expected gross rents) to the income side of your DTI ratio.