Must Sell SFR to Purchase Duplex as Primary Residence?

[Qusay F.]

Hello BP community,

I would kindly ask for your input on this issue.

I recently spoke with a mortgage broker regarding purchasing a second home and renting out my current residence. He gave me rates based on different scenarios. I currently live in a SFR that I purchased with a conventional mortgage. Due to family changes and ever increasing taxes in my area, I am looking to purchase a duplex nearby and make it my primary residence.

The broker told me I would have to sell my current SFR in order to purchase the duplex as a primary residence even though I qualify to buy it as an investment property (at a higher APR, of course). I was puzzled. He told me its so people don't try to "cheat the system". I have lived in my current residence for over a year and I'm looking to downsize, rent out my SFR, and have the added cash flow subsidize my mortgage payments.

I would like to hear from other buyers/investors/brokers - is there truth to this rule? Or is the broker trying to get me to borrow at a higher rate? Any suggestions or strategy is much appreciated.

Thanks

Q