Conventional Financing for a Rent-By-Room Family Home?

[Cody Pexton]

Hi All, 

I'm looking at a home in Pierce County, Washington. It is built as a single family but currently being rented out room by room (there are 6 rooms and they are all occupied). There is nothing weird about the building, no two kitchens, no strange remodeling... it actually looks like a SFH.

My question is: Has anyone had luck finding a lender who would do a 20% conventional load in a situation like this? The lenders we have spoken to make it sound like it's a grey area- not likely, but not impossible. They can't say for sure until after an inspection, but we don't have the time to wait for an answer if we want this deal. I'm wondering if anybody has ACTUALLY gone through this or heard of someone going through this and has been approved/denied a conventional loan. If there has been success, which lender did you use (if you are in WA). The alternative route is a commercial loan and 25% down which makes the deal a lot less sweet (but would likely still (barely) work). 

Some other notes:

-I will NOT be living in this building ourselves. Simply continuing to rent out room by room.

-This building is currently marked as multi-family, but can also be used as a single-family home. Its zoning is R4L (not C2) - this zoning allows both uses.

Thanks,

Cody