How can you House Hack in Expensive Markets?

[Tim Swen]

Hi BP-

I've been reading books about FHA house hacking but it just doesn't seem feasible in expensive markets. So I was wondering if I missed anything?

Take NYC(where I live) for example. I've seen most of the 2 family homes range between $800K to $1.2M. And FHA Maximum Mortgage Amount for a 2 family home is $1,053,000.00. If I were to take out a 3.5% down 30 year FHA loan then here's the breakdown for a $1,053,000.00 and $850,000.00 home respectively at the bottom of the page.

If the DTI for getting an FHA loan is 31%. Does it mean you need to make at least $258K to be able to house hack in NYC?

Sales Price		$ 1,053,000.00	$ 850,000.00
Down Payment (3.50%)		$ 36,855.00	$ 29,750.00
Mortgage Amount		$ 1,016,145.00	$ 820,250.00
FHA Funding Fee (UFMIP) +		$ 17,782.54	$ 14,354.38
Mortgage Amount (Final)		$ 1,033,927.54	$ 834,604.38
PITI
Principal & Interest		$ 4,715.24	$ 3,806.22
Annual Real Estate Taxes		$ 1,422.58	$ 1,190.00
Annual homeowner's insurance		$ 1,000.00	$ 1,000.00
FHA MIP = 1% X Base Mortgage/12 months		$ 846.79	$ 683.54
MONTHLY MORTGAGE PAYMENT =		$ 7,984.61	$ 6,679.76
DTI	0.31
Monthly Income Requirement		$ 25,756.81	$ 21,547.61
Yearly Income Requirement		$ 309,081.68	$ 258,571.35

[Anibal Mijangos]

Another thing you may want to look at is FHA loan limits in New York. There are some cities and counties that have a limit of $685,400 for a 4plex. You can find this info on HUD's website.

House hacking and BRRR tend to be glorified investing strategies. Although powerful, there's always another angle to them that don't always get the spotlight. Although still very possible on the coasts, I've seen house hacking be a more powerful investment strategy away from the coasts.