Loan amount for house hacking

[Emily Wilson]

Hi,

We've been telling a family member about house hacking.  I'm not sure it will work in the Bay Area as it is just so expensive here and the rents probably won't cover enough of the costs to an amount he can afford.  However, assuming he could find a good deal that would work out, how does he get a loan?  I did a house hack 2 years ago, but in a lower cost area with significantly more income etc., so I didn't run into this problem.  

If a person wants an FHA loan and they are not a high earner with a large down payment, will the bank take the rental income into consideration as part of the loan. If you tell them the house hacking plans, will they see it as an investment property with higher rates and 25% down required?

Bonus points if anyone has done a house hack in the Bay Area recently and can share the experience.

Thanks

[Emily Wilson]

Quote from @Sam Hudacek:

I dont believe FHA will take that future rental income and count it towards your DTI. A conventional loan will but I believe only up to 75% or could be lender dependant.

It would be unlikely to get a home for under 1 million in this area, and there is no way he could come up with 250k down payment nor could he qualify for the loan with his own income, so does that mean he's out of luck unless he moves to somewhere like Ohio? Depending on the situation, I don't think it would be too hard to get rents totalling about 3500-4k per month.