I used a tiny house to house-hack but not I can't use the income on the rental house

[Tiffany Da Silva]

Hello all!

I recently purchased a small farm (1 acre) with a house that we just finished remodeling. I am planning on renting the house out for roughly $1950 to have some extra income to use when showing income for my next loan. Problem is since its a "single family" residence it can't be my primary & an investment at the same time therefore I can't qualify it as income. (we live in a tiny house on the acre separate from the house)

Has anyone dealt with something similar or know what is the best way to make that income usable for a loan? If not are there any other loan programs that could get capital to buy another investment?

[William Simpson]

Hi Tiffany!

That ol' chestnut of "boarder income" can be an annoying hurdle to deal with conventional finaincing. The good news is that Fannie Mae and Freddie Mac recently relaxed underwriting guidelines to allow for it.

i recommend checking out Freddie Mac's Home Possible and Fannie Mae's HomeReady program.

Outside of that, working with a mortgage broker can also help you shop around for lenders that allow for boarder income.

Good luck! Hope this helps.

[Tiffany Da Silva]

Thanks William for that insight! I actually work for a mortgage company and am a loan officer myself but as I just started i'm trying to wrap my head around all the programs and markets.

My broker doesn't focus on investors so it might be wise to find someone who does and learn from them. I will definitely look into those programs though! :)

[Ko Kashiwagi]

Hi Tiffany,

Have you thought of using investor-focuses financing programs like DSCR? A lot of investors navigate this by using rental income to qualify rather than personal income.

[Tiffany Da Silva]

Quote from @Ko Kashiwagi:

Hi Tiffany,

Have you thought of using investor-focuses financing programs like DSCR? A lot of investors navigate this by using rental income to qualify rather than personal income.

 Hey Ko! Thank you for the idea! I actually just did a dscr loan to pay off the hard money I borrowed on the second property (where we live and rent the actual house) I estimate the appraisal to come in around $215-280K which if I were to take out 80% would barley give me enough to buy anything in the FL market and have cash left over for renovations.

Not sure if im missing a step here or if it might be best to buy an auction home with that cash to flip and have more capital to have more deal options. 

I would love to hear your thoughts :)

[Amber Stout]

Hi Tiffany, some conventional guidelines allow for the use of "boarder income". Typically they will need to see 12 months of documented income from the property. How long has the unit been rented for at this time? Feel free to DM me and we can walk through it. 

[Tiffany Da Silva]

Quote from @Amber Stout:

Hi Tiffany, some conventional guidelines allow for the use of "boarder income". Typically they will need to see 12 months of documented income from the property. How long has the unit been rented for at this time? Feel free to DM me and we can walk through it. 

 Hey Amber, The home hasn't been rented just yet as we are finishing up renovations & we just purchased it 6 months ago. I think that is the biggest issue but perhaps next year when my income is better I might be able to use both my income and the boarder income.

[Amber Stout]

@Tiffany Da Silva - Yes! That'll be best. You could purchase using a DSCR now if you wanted to as it won't take into account DTI or income. It'll be based on the specific property you're considering.