Lending & Building a House-hack

[Chris Harpe]

Howdy BP!  I'm looking to build a house hack this year and I'm wondering how quickly after I build and rent the property will lenders typically allow me to count the rental income from this property towards my Debt to Income ratio?

Example: John builds a 4BD / 2BA single family rental house and completes it in August, 2021. Once complete, John rents out three rooms and lives in one. The house cash flows $200/mo after all expenses (prop. mgmt, taxes, insurance, cap-ex, maintenance, etc). To build the house, John got a construction loan. He put $20,000 down, and the bank pitched in $250,000 to finance the land purchase and the cost of building the house. The loan converts to a fixed 30-year automatically with 3.4% interest when construction is complete. The monthly mortgage payment from this loan is about 50% of John's monthly ordinary income from his W2 job, which essentially maxes out his DTI ratio, unless the rental income from the house is factored in which would offset the mortgage payment.

The house is finished in Aug 2021 and the house appraises for $370,000. The next month (September 2021), John then tries to get a Home Equity Line of Credit to access the $100,000 of equity in his new house.

Key question:  do you think a lender will lend a home equity line of credit against the house's equity before the rental income from the house is reported on John's 2021 tax return which will be filed in 2022? Will the lender consider all or part of the rental income from the newly built and rented house? 

Assumes long term rentals (1 year or more), no other debt outside mortgage on newly built house.