FHA requirement question

[Naseem Razek]

Hello all,
This is my first time posting here so please excuse me if I'm missing anything. I currently have a conventional mortgage 7/6ARM. I am looking to rent that single family home and purchase a multifamily property using FHA loan in order to lower my required down payment. When I purchased the SFH I assumed that lenders would take some percentage of the rental income and apply towards my DTI. Now that I am ready and speaking to lenders I've been told that FHA guidelines will not allow the use of rental income from my currently mortgaged property. That lender is telling me my options are to sell my current property and proceed with FHA or put down 25% on the multi-family. Is this accurate information? What are my options if my goal is to put down as little as possible and house hack?
-Current property was purchased 3 months ago through my credit union as primary residence but they are allowing me to move early.
-Income is just over 10k/month - current mortgage 2900/m including tax and ins, no other debts - multifamily property will be in the neighborhood of 500,000 purchase price

Any advice would be greatly appreciated! Thank you

[Lawrence Potts]

Quote from @Naseem Razek:

Hello all,
This is my first time posting here so please excuse me if I'm missing anything. I currently have a conventional mortgage 7/6ARM. I am looking to rent that single family home and purchase a multifamily property using FHA loan in order to lower my required down payment. When I purchased the SFH I assumed that lenders would take some percentage of the rental income and apply towards my DTI. Now that I am ready and speaking to lenders I've been told that FHA guidelines will not allow the use of rental income from my currently mortgaged property. That lender is telling me my options are to sell my current property and proceed with FHA or put down 25% on the multi-family. Is this accurate information? What are my options if my goal is to put down as little as possible and house hack?
-Current property was purchased 3 months ago through my credit union as primary residence but they are allowing me to move early.
-Income is just over 10k/month - current mortgage 2900/m including tax and ins, no other debts - multifamily property will be in the neighborhood of 500,000 purchase price

Any advice would be greatly appreciated! Thank you

As mentioned earlier, you'll need a signed lease that shows sufficient income to cover the mortgage. I believe they take a percentage of that gross rental income and apply it towards your DTI. Lenders are all different and I encourage you to speak with multiple lenders, especially those that invest in real estate themselves and know what you are wanting to accomplish with this purchase.

@Jaron Walling I think Naseem is wanting to house hack using the FHA mortgage, so as long as he is intending to occupy it within 60 days of closing for at least 12 months, he can use the FHA mortgage for any property 1-4 units as long as it passes appraisal (not too distressed like you mentioned).

FHA may have issues with you moving on to the next property so soon, they are vary weary of their product being utilized as an investment product (intended for first time home buyers), you may be asked and required to provide an LOE (letter of explanation) as to why you are moving (financial distress, new job, etc), but that's for you and your lender to determine.

Hope that helps! Let us know what you decide to do and if you find a lender to help your situation. I've had great success with Academy Mortgage here.