Can't Qualify for Owner Occupied

[Michael N.]

Hi all, I've been house hacking a duplex for over a year (fulfilled one year occupancy) and was in the process of qualifying to house hack another multi-unit, but the 2 lenders I've talked to won't qualify me because they say the new property needs to be > 50 miles away to justify another primary residence loan. They said additionally, because I'm looking at quads from a duplex, it looks like I'm trying to get investment properties for a lower interest rate, even though I plan to live there for at least a year. Any advice?

[Upen Patel]

@Russell Brazil Thanks for the mention.

@Michael N. @Melissa Gittens @Ariel Hernandez

What you are running into is a valid issue. As the agencies and lenders are loosening the requirements for owner occupied primary residence mortgages, they are clamping down on investors trying to house hack as primary residence. You will run into this issue with ALL lenders (at least the smart one that know saleable loan issues) as most of them want to sell the loan to the agencies. And the agency is going to do the smell test. The lender doesn't want to be forced to hold a loan on their books.

If you have a valid reason then it can certainly be done (e.g. family getting bigger so need more space, health - can't go the 3rd floor unit, etc.), and I have done it for my clients. Be honest and upfront with your mortgage banker, and they will try to do what is doable. If you hide something and it comes up during the loan process (and trust me, we will find out about it), it will jeopardize the loan.

Hope this is helpful.