Financing a house hack with retirement accounts (SDIRA)?

[Kevin Klaas]

Hi BP nation!

Newbie investor here.

I've been saving money in my retirement accounts (roth IRA, traditional IRA, rollover 401k) through Vanguard. I've done some research on self-directed IRAs and was hoping to open a SDIRA (or Solo 401k) and use the money to purchase real estate.

My goal is to get started house hacking with a HomePossible loan 5% down or maybe FHA 3.5% down in downtown Chicago (ideally 3 or 4-flat MFH). I wanted to finance the purchase (down payment, closing costs, holding costs, rehab, etc) using my retirement accounts. Unfortunately, I've since found out that using an SDIRA to fund a house hack breaks the rules of an SDIRA since I intend to live in one unit and rent out the others.

Some questions I have:

1. What are some alternatives for using retirement accounts to fund a house hack? Which leads me to this question - are retirement accounts off-limits to finance owner-occupied homes?
2. I also have a business partner that intends to house hack as well. Would I be able to finance his house hack split 50/50 (and I would not live in the MFH) with my retirement accounts through an SDIRA?

Any help is greatly appreciated! 

Thank you,
Kevin