Issue Refinancing Duplex with STR due to FNMA Eligibility Reqs

[Ray Collins]

Hello!

Long time BP-listener, first time forum-poster here. I tried searching the forums for a similar thread, but I couldn't find anything on this specific topic.  Not sure if this is the right sub-forum to post to -- please redirect me as necessary!

Background:

I own a duplex – I live in 1 unit year-round and rent out the other unit as a STR via Airbnb. I've been permitted by the city and operating for the last 2.5 years.

Problem:

I've been trying to refinance the property – the refinanced loan would be around $300k. Recently I hit a snag in the process: my contact is telling me that Fannie Mae classifies "bed and breakfast properties" as ineligible property types, and therefore my property is ineligible for refinance through their company.

Question:

Are STRs legitimately considered "bed and breakfasts" in the eyes of Fannie Mae, meaning that I cannot obtain a refinanced loan backed by Fannie Mae? Has anyone else had this problem, and it there a way around it?

Additional Notes:

I've dug through the Fannie Mae selling guide and related articles, but I can't find a clear understanding of the definition of "bed and breakfast property." I did find a Fannie Mae article detailing the rationale of classifying "bed and breakfast properties" as ineligible: "Fannie Mae purchases and securitizes mortgage loans secured only by properties that are primarily residential in nature. Boarding houses and bed and breakfast properties are not primarily residential in nature and therefore are not eligible." The property is zoned as residential, and I live year-round in a unit on the property that occupies >50% of the livable area. Am I missing something -- why would my property not be considered primarily residential in nature/why would it be considered a bed and breakfast property?

I did also clarify with my contact that the issue is not around whether or not STR income can be used in my application for the refinance – the issue is purely related to the property eligibility requirements through Fannie Mae. My DTI without the additional income is not the concern.

Any insight would be greatly appreciated!