All Forum Posts by: Ray Fajardo

Above 4 units you would need a commercial loan but they would look more at the deal then your personals for qualification. Though the financing would not be as favorable compared to a 4-plex. 

You can use the income on a 4-plex to help qualify , I purchased a home with a granny unit and I was able to add 1k to my monthly income to lower my DtI ratio.

I personally am looking for a distressed 4-plex to House-Hack right now because of the low down payment options.

@Ray Fajardo

Keep in mind that with FHA loans, 3-4 units have to pass the self sufficient rule. The remaining income from the other 2-3 units has to cover your PITI, otherwise it fails.

To use rental income from your primary residence, FHA loans require that your new primary be 100 miles away from the new one. If it is not, you will eat both PITI payments and likely not qualify unless you have sufficient income.

 Don't forget that as soon as you list your single family for rent, you have the ability to do a cost segregation study. This will add to your cash flow since your income on the rental will not likely be taxed until your benefits run out. Of course, this depends on your tax situation and the original purchase price of your SF plus whatever improvements you put in for turning it into a rental. Be sure to discuss this with your CPA/tax professional once you get the cost seg estimate so that you understand how this will or will not affect your ability to get a loan. It could also affect when you do the cost seg. You will have the benefit of 100% bonus depreciation if you list it for rent in 2022. In 2023 the bonus drops to 80%.