Qualifying for future mortgages while house hacking

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I am going to be looking at duplexes within the month or so, but in looking at some of the fannie mae overlays for conventional loans, it appears that the income from the other side gets completely added to my income, however the whole PITIA is considered a debt obligation and affects the DTI negatively. The relevant section is here:

Treatment of the Income (or Loss)

The amount of monthly qualifying rental income (or loss) that is considered as part of the borrower's total monthly income (or loss) — and its treatment in the calculation of the borrower's total debt-to-income ratio — varies depending on whether the borrower occupies the rental property as his or her principal residence.

If the rental income relates to the borrower’s principal residence:

• The monthly qualifying rental income (as defined above) must be added to the borrower’s total monthly income. (The income is not netted against the PITIA of the property.)
• The full amount of the mortgage payment (PITIA) must be included in the borrower’s total monthly obligations when calculating the debt-to-income ratio.

So I guess I am asking if there is a way around this, or if I am reading it wrong, or what other strategies you all use so that you can qualify for future mortgages? From the looks of it, I would have to move into an apartment so that it is no longer my "permanent residence" in order to make my DTI better to get more loans.

[Account Closed]

Originally posted by @Chris Mason:

Originally posted by @Account Closed:

So I guess I am asking if there is a way around this, or if I am reading it wrong, or what other strategies you all use so that you can qualify for future mortgages? From the looks of it, I would have to move into an apartment so that it is no longer my "permanent residence" in order to make my DTI better to get more loans.

 Hi Seth,

Yup, that's an important distinction that Fannie makes when doing owner occupied v non owner occupied math.

If you're buying another primary residence, then that new home will have the owner occ math, and the departing primary residence non owner occ math.

It also may be a non-issue. If you qualified for your current property, and the next one is cashflow positive, and you haven't lost your job or taken out a new $700/mo car loan, etc, DTI should be a non-issue.

 I see. So basically once we plan on making the move to another property, that new one will be owner occupied math, and the one we are moving from will have non-owner occupied math (even the unit we are living in until we move to the new property).  That is very helpful information. Looks like once we get in and qualify for a first property, the financing won't be hard for these first ten or so, but coming up with enough money for future down payments could be the issue.  Thanks Chris, that was very helpful.