Hi all! I need some help brainstorming some ways to finance my first house hack. I am hoping to put a 3.5% down for a small MFH or SFH. I don't currently own real estate.

The dilemma I have is that I work as a traveling physical therapist.  I receive a W2 for my work, however about 66% of my income consists of per diems. They are non taxed and don't show up on my tax returns (they are seen on my pay stubs though).  So to the eyes of a lender, I make $15/hr. That's my taxable income.  Thus I am getting pre-approved for very low amounts.  I have a car loan that will be paid off by the end of this year and student loans as well.  

I decided to transition to travel PT because of the overall higher pay and lower taxes.  My overall income is significantly higher than when I worked as a permanent therapist. However, it seems like this plan is backfiring on me as financing is appearing to be difficult.

Family co-signing isn't an option at this point. Can anyone help me brainstorm some other creative ways for financing?

@Timothy Chi you have a few options here actually. The first thing to remember is that if you buy an occupied property then 75% of the rented units count as income to help you qualify. This is part of what makes house hacking so easy in a lot of ways. The other rents boost your income. You should make sure you are working with an investor friendly lender who understands this. You should be able to qualify for a much more expensive duplex than you could for a single family home. 

The other thing you could do is to report more income on your taxes. This will sound counter intuitive, but a lot of investors have run into this issue over the years. I even know some successful rental investors that report income just so they can qualify. I wouldn't personally go this route unless you just can't get into the 2-4 unit space. 

Originally posted by @John Warren :

@Timothy Chi you have a few options here actually. The first thing to remember is that if you buy an occupied property then 75% of the rented units count as income to help you qualify. This is part of what makes house hacking so easy in a lot of ways. The other rents boost your income. You should make sure you are working with an investor friendly lender who understands this. You should be able to qualify for a much more expensive duplex than you could for a single family home. 

The other thing you could do is to report more income on your taxes. This will sound counter intuitive, but a lot of investors have run into this issue over the years. I even know some successful rental investors that report income just so they can qualify. I wouldn't personally go this route unless you just can't get into the 2-4 unit space. 

That's great advice. I did ask my lender about using rental income and he said it needs to be a history of showing rental income. Future rental income wouldn't count.  I've heard that with a couple of lenders but it sounds like with your experience, that's not always the case?

I never thought about reporting more income on my taxes. The benefit of being a travel PT was the significant higher income and lower taxes. It certainly is backfiring in my current situation though! I think reporting more income on my taxes would be a good alternative come early next year if I still don't find another way.

Thanks for the advice!

@Timothy Chi you just need the right lender.... it all comes back to your team. What your lender told you is not true. You can also use market rents if you have a vacant unit. 

The tax situation is a tough one. I get it that you don't want to pay Uncle Sam more than you have to, and you may not have to. It sounds like you need a lending partner that knows the investing space. 

Originally posted by @John Warren :

@Timothy Chi you just need the right lender.... it all comes back to your team. What your lender told you is not true. You can also use market rents if you have a vacant unit. 

The tax situation is a tough one. I get it that you don't want to pay Uncle Sam more than you have to, and you may not have to. It sounds like you need a lending partner that knows the investing space. 

I think you're right. It's a little frustrating because I've crunched the numbers and know what I feel comfortable affording. I'll do some more research on different lenders. Thanks for the help.