How do I get a 2nd house to house hack given my situation?

Question

I own my own home. I’d like to buy a second property to live in and rent out my current property.

I have a $50k HELOC on my primary residence taken out in January. I haven’t spent any of the $50k HELOC. Is there a way to avoid the fee to close the HELOC early?

I heard that I’d need to refinance my FHA into a conventional before I could take out a FHA on the second property. Could I just use a DSCR loan to house hack? In other words, could I get a DSCR loan with 3.5% down and an interest rate similar to FHA?

Also is it ok that I have 3 one month gaps in my work history in the past 3 years? I’ve been in the same industry for the past 8 years. My credit score is 715.

Peter Mckernan · Answer

@Mike Schorah

You can refi out of it as Conventional verse FHA if you are in getting into the next one. You'll need to be 20% in that one now, and you'll have to ask that lender for clarity or look back on the paperwork for HELOC fee closure (my experience no) it's paid upfront when taken out/loan started.

Also long as you have the 3 month gap going from same position and there is a good reason you are good to go. The same industry 8 years is good and if the gap was more than a year ago it is less of an issue. The farther it is back from when you buy the better it is for your lender to be okay with when buying (example if it was 6 months ago they will ask for a lot more than if it was 18 months ago).

Paul Defngin · Answer

If you have been in your current house for at least a year and you want to vacate and convert it to a rental and go buy another property then there is no reason that you have to refinance. You could buy the next house using conventional financing and put down 5%, in most cases. If you qualify to carry both house payments, great, but if you don't, then you'll need to have a lease and tenant to occupy the vacating house in order to use for offsetting that house payment only, including the HELOC payment which you can use to buy the next house.

Hope that helps. Good luck.

Nicholas L. · Answer

@Mike Schorah  The interest rate on any DSCR loan is likely going to be much higher than what you're paying now, but I think you could refinance your FHA loan into a DSCR loan.  This would also eliminate the PMI.

How do I get a 2nd house to house hack given my situation?

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