Multifamily Financing While Also Owning SFH

[Kyle Hilliard]

Hey everyone, 

My wife and I are currently looking to purchase our first multifamily property (preferably a 4-plex) to house hack. Ideally, we would like to use an FHA loan for the 3.5% down payment. We currently own a single family home, and want to rent it out once we move into the multifamily. Our current home is in East Lansing, MI and we would like the multifamily to be in the same general area.

I spoke to my lender about our plan, and he said that if the SFH and multifamily are in the same area (within 50 miles was his cutoff), they would treat the multifamily as an investment property, and we'd have to put down 25%. I can think of a few potential ways forward:

1. Suck it up and pay the 25% down payment

2. Sell our current house? I'm not sure if that would fix the problem or not. 

3. Buy a multifamily 50 miles away from our SFH. We planned on self-managing these properties, so I'm not sure if that's too great of a distance to be traveling back and forth to do maintenance etc.

4. Use an alternative source of financing such as seller financing. 

Have any of you run into this problem before? We have around $70,000 to invest, so we really wanted to make our money go as far as possible. 

Thank you all so much for your help!

[Ashley Cross]

You should definitely speak to some other lenders because the only thing that could be an issue is your DTI. I'm not sure why the lender is suggesting you move 50 miles away. I've seen that a lot of lenders aren't well versed on the guidelines for investors. I would ask whomever you speak to about how much business they're doing with investors if you plan on continuing to purchase with the same lender. My company lends in Michigan and I'm happy to help. Feel free to PM me.