Multi-unit loan strategy

[Lindsey Matejak]

Hey BP! I just refinanced my primary residence to a 30yr conventional fixed rate loan. Our building is a 3-unit in Chicago--my wife and I live in one unit and rent out the other two units. We would like to buy a new multi-unit and move into one of the units of the new property while we rent out the other units in the new building. We want to keep or current building as a fully rental property.

1) How long are we required to stay in our current multi-unit after refinancing? 1 year? Any way around this?

2) We want to put down the least possible amount on the next property as long as the numbers work for cash flow. We've already explored the FHA route, but with the restrictions in place, we have found that this is impossible for us to do in Chicago (i.e. per the lender: must be 100+ miles from our current property, FYI loan limits, they won't take into consideration the potential income for the unit we are currently living in to calculate debt to income ratio which is about $3000+ per month, etc). We are being told that 20-25% is are only option if we want to buy another multi-unit in Chicago. Anyone have alternative information or ideas for less down payment?

Thanks in advance for your assistance!

[Zack Karp]

This thread is making me cringe.  I understand people are trying to help, but you all are making this really confusing for the OP.  There are 2 very simple concepts here.

1. When you have an EXISTING FHA mortgage, you cannot get another FHA mortgage unless you relocate 100 miles away.

2. When getting a new FHA mortgage, if you are not relocating 100 miles away, you cannot use rental income from the unit you are vacating.

Now let me expand on this.  The OP already refinanced the existing property to a Conventional loan.  So rule #1 doesn't apply here anymore.

For #2, here's where people get tripped up. If it was a 1-unit property you are converting to a rental property, then you cannot use any rental income from that property at all, and have the full PITI you have to qualify with. But in the case of a 2-4 unit, you ABSOLUTELY can use rental income to qualify from the other unit(s) that you did not occupy, which will offset the PITI of the vacating property. And for the property you are purchasing, just like usual, you can use the rental income to qualify from the unit(s) that you will not be occupying.

@Lindsey Matejak (Lindsey) you can absolutely proceed just like we discussed the other day.