How to downsize into owner occupied property

[Chris Kircher]

Hello. I own a property in Baltimore city that I am considering renting out fully. I believe I can get $3000 a month for this property, as it is in a highly desirable area. I looked into the possibility of buying another property that is much cheaper, and doing a live in flip in that property. When I reached out to several lenders, they said that I would have an issue downsizing from my more expensive house to a lower priced house, and that the only way that I would be able to get owner occupied conventional rates would be if I upgraded into a house that was worth more than my current property. Has anybody else navigated an issue like this, and if so, how did you do so? I’m aware that I could go the cash/private money route, but I’m trying to take advantage of 3.5% down. Thanks.