Why can't I get an FHA?

[Rick Novotny]

Hello BP Friends!

Currently, my goal is to house-hack a 4 unit building in Kansas City and move there. I currently live in Denver. I am struggling to get loans right now so I think I need to restructure the way my business is setup because I know the income is there. I am trying to get an FHA because I only have about $50,000 in liquid capital available currently. I'll try to keep this as concise as possible. Please let me know if I left anything out.

Personal Financial Info:

W2 Income in 2019 was about $140,000. My credit score is 775. I currently own 17 rental units. 1 Single Family, 4 Duplexes, 2 Quadplexes. Most of these are owned in an LLC with a business partner. My personal living expenses are about $1,500 per month including rent and I have no loans outside of my income producing mortgages.

The single family property is owned solely by me.

Debt: $67,000

Payment: $627/mo

Rent: $1050/mo

Three duplexes were purchased with my business partner, so the mortgages are jointly in our personal names. However, these property's income and expenses run through our LLC. I think this is where the banks are tripping up. For example, one bank said they couldn't count the business income towards my debt-to-income.

Total Debt for these 3: $259,800

Total Payment for these: ~$2,200

Total Rent (still have 2 to reno/raise): $4,633

The remainder of the units are owned in the LLC and the loans are through the LLC via credit union portfolio loans.

Total of 17 units with revenue of $14,200 per month. Debt service is about $6,400 per month.

Why am I struggling to get loans? My financials are pretty good, but might not look good to a lender because of the duplexes explained above? Do I need to only work with credit unions at this point? Do I need to refinance those 3 duplexes into the LLC?

Thanks in advance for the advice!