All Forum Posts by: Mohammad Fanaei

Hello Jacob! Thank you for your comment. I will be living in one of the units of my second 2-family househack. That would preclude using DSCR loans.

Hello @Derek Brickley! Thank you very much for your response.

I will use lease agreements from both units of my first 2-unit househack property (including the one where I currently reside). 75% of the total rent collected from the first property will cover its PITI completely.

Your comment was very helpful in clearing up my confusion. Thank you!

Hello Everyone!

I am currently househacking in Boston in a 2-family property. I bought this property last year as an owner-occupied property with a 20% down payment, live in one unit, and rent the other unit.

I just went under contract for my second househack in a Boston suburb. It is another 2-family property. I intend to rent both units in my old househack, move to one unit in the new property, and rent the other unit. I will make a 20% down payment on the new owner-occupied property. I am looking for a lender, local credit union, or mortgage broker that can fund this deal. The best interest rate that I have found so far is 7.375%. However, my DTI ratio is slightly higher than what they can accept. They also have a high mortgage origination fee of $26K, which seems too high, given the fact that I will refinance this loan within the next two years.

My back-end DTI ratio [i.e., (old PITI + new PITI)/(Salary + 0.75(Rent from Old Property (both units) + Rent from New Property (only one unit)))] would be around 65%. My front-end DTI ratio [i.e., (New PITI)/(Salary + 0.75*(Rent from One Unit in New Property))] would be around 50%. 75% of the rent of the old property will fully cover the PITI of the old mortgage. I do not have any other debt, student loans, or credit card balance other than my first mortgage.

Do you know any mortgage broker or local credit union in the MA area that I can contact to fund the deal? Most local credit unions have lower DTI ratio limits. I would greatly appreciate any recommendations or referrals that I can connect with to assess different options for the funding. Thank you very much for your help!

Hello @Devin Peterson! Thank you for your response. I am looking to make a 15% to 20% down payment. The high down payment is necessary so that the DTI ratio is within the range to be qualified for a conventional loan. I have not asked the lender specifically about the Mass Housing programs but the last time that I checked, I was not qualified for them.

I will connect with you for further conversation. Thanks again!

@Doug SmithThank you so very much for the detailed explanation. It was very helpful. I am looking at conventional loans, and as you said, scaling becomes very difficult based on the first method of calculating DTI, especially if you are in an expensive market.

I bought my first househack last year, and I am getting ready to make an offer for the second one. My question is about how the DTI ratio is calculated when I apply for the second mortgage. My understanding is that assuming that one has no debt other than the mortgage for the first househack, it is calculated as

(PITI1 + PITI2) / (Monthly Paycheck + 0.75*Rent1 + 0.75*Rent2)

Rent1 is the total rent collected from the first property assuming that you have moved out and have fully rented it, and Rent2 is the rent collected from the other units in the new multi-family property that you want to buy.

Is this correct?

The reason I ask is that a new prequalification letter from the lender has listed the maximum purchase price that results in a DTI ratio of 60% if I follow the above equation. I can't figure out how they are running the numbers so that I can put it in my spreadsheet and can figure out if each property on which I want to make an offer makes sense. I am looking at 2- and 3-family properties in towns closeby, where the taxes and rents are different, and do not want to ask the lender to run the numbers for every option.

If anyone can help me figure this out, I would greatly appreciate it.

Hello @Drew Sygit! Thank you very much for your comment. What a great set of recommendations. I agree with you that a combination of an FHA loan with a higher than usual downpayment might relieve the sellers, increasing the likelihood that they would accept an offer. On your other point, I will not try to rush through the process by setting a self-made deadline of August or September. I have just started to look further into options so that I get to know the area and consider different criteria in my search. My plan is exactly what you said: To use STRs for the first few weeks of my stay until I find a good deal (hopefully with reduced market demand at the start of the fall and the rise in the interest rates by then). I did the same when I moved from Detroit to Philadelphia and learned a lot just by observing how my live-in AirBnB host treated his customers and handled his business. Thanks again for your great suggestions!

 Thank you for the clarification. That is one hell of persistence that has paid off very well. The deal that you were able to secure is awesome. I saw the 5K figure and thought I must be missing something. Verry well done! I will be in touch. Thanks again!

 Great! Thank you. I would hope so.

Hello @Kaiden Swainamer! Thanks for your comment. It is encouraging to see that you have been able to secure your multi-family property with an FHA loan. Cogratulations! Your path seems to match what I would like to have. Thanks also for bringing up the landlord laws. It is on my to-do list to familiarize myself with the laws and required permits that I need to have as a new landlord as we get closer to when I would like to close on a property. I will definitely reach out to you soon. Thanks again for your comment!

Hello @Grace Olinger! Thank you very much for your comment and for pointing out the restrictions that an FHA loan puts on the possibility of having STRs under 30 days. I was not aware of such a restriction and had not read about it anywhere. Also, thank you for introducing me to Furnished Finder. I was not familiar with it, and it is exactly what I need right now, even before starting the house hacking, as I am trying to rent my room before taking a trip for a couple of months. It is a great resource. I also appreciate the list of locations that you recommended. Everett was on my radar but the other ones were not. Thanks again for your comment. I will be in touch as I progress through the journey.