Trouble using 5% down conventional loan to aquire multifamily

[Naseem Razek]

Hello all,

I'm hoping someone here can point me in the right direction. In December 2022 I purchased a single family home with 5% down which I am currently living in. I am now trying to use the new 5% down option on conventional loans to buy a multi unit property which I will be occupying while renting out the other units. I am having trouble when speaking to lenders. A couple lenders have told me that underwriting will not approve the new loan as I am downgrading my living situation from a sfh to a condo in the multi unit. I don't understand why this matters but they are telling me my options are to either sell the sfh (I would like to keep and convert to rental) or rent the sfh out first, then apply for the new loan with proof of rental income. They can use projected rent for underwriting but the purpose of renting out before applying for the new loan would be to help convince the underwriter to accept the deal. This, I am told, would make it easier for the underwriter to pass the deal through. I really don't want to sell and I definitely don't want to rent out my sfh and have to rent until I purchase the multifamily. Is here any way around this?

Thank you so much for taking the time to read and help with my situation.

[Andrew Postell]

@Naseem Razek certainly wait until 1 year.  Now, there is some nuance here...so if you are buying on the same street as yours, then just about everyone will have an issue with that.  But in just about every other scenario a good lender can make this work.  I don't mean to talk about other lenders here...but lenders can be very different.  Just mentioning the phrase "house hack" to some lenders will get strange looks.  Some don't speak our languange, don't understand our methods, and that's why we usually don't work with them.  You can certainly work with whomever you want...but try to focus on "investor friendly lenders".  How do you know which lenders are "investor friendly"?  Read this post HERE to get some good techniques on how to find them. 

Thanks!