Issues with purchasing second Primary Residence

[Yohannes Sium]

Hi All,

I had purchased a house last year as a primary residence with conventional loan and put 3% down. My goal was to utilize the primary residence and purchase a house every year, however I am having some issues which I want to clarify. My loan officer informed me that even though I have the D/I ratio to purchase another house, I will not be able to do so using the 3%. I have fulfilled my 1 Year commitment, however, he is indicated for me to utilize the 3% again I would have to move very far or have a drastic change which justify it.  Is this true? How do people manage to purchase a house every year utilizing the 3% down?

[Whit B.]

@Yohannes Sium You’re much more likely to be able to make it work putting 5% and moving each year. I’ve been doing this for 6 years now. You need to turn your primary into a rental before you go to purchase your next primary. The bank will want to see an active lease. If you time it right you can get a lease signed 30 days in advance of tenant move in and close escrow on your new home around the same time. If you time it wrong you’ll end up in a VRBO with your stuff in storage for a month or so. Either way, good luck!

[Yohannes Sium]

Hi Whit,

I have been house hacking so I actually have an active lease already and commitment for them to renew for a whole year. 

If I put the 5% down, does this fix the issue of moving 70-100miles away/having significant life even change? @Whit B.

[Whit B.]

Yes. I think your phrasing may be throwing the lender off. You’re not actually looking for a “second primary”. You’re looking for a 1st primary while you turn your current home into an investment property. Try explaining it that way and see if you have better luck!

[Reid Chauvin]

Hi @Yohannes Sium - the 3% down option is for first-time homebuyers. You will be fine doing what you intend with putting at least 5% down. There is no need to move far away to buy a new primary residence. If you continue to run into trouble with this particular loan officer, I suggest reaching out to someone else. Let me know if there's anything further I can do to help.