Hitting a DTI wall with house hacking. Is DSCR refinancing an option

[Joshua Voigt]

My wife and I own a SFH and a duplex, both house hacks. We currently live in one unit of the duplex and rent out the other. We have 2 years of reported rental income on tax returns for both properties. We are moving for work, and I want to purchase a fixer upper in the new location that will eventually be another house hack, but it may be a few years before we would rent it out.

We have a interest rate around 3% on the SFH, purchased in 2021, so doing any refinancing with that doesn't seem to make sense. It cash flows about $400/month currently.

Currently the rent for the duplex is $1,120 with a mortgage payment of $1,193. The unit we currently live in would rent for the same amount minimally, most likely a bit more. I came across DSCR loans, and was wondering if refinancing the duplex, purchased two years ago, would help with our DTI when it comes to purchasing a new house hack. We don't have a lot for a down payment, so house hacking another SFH seems like the best option for purchasing in the new location.

The lender I spoke with in the new area said our DTI is the biggest issue, and that selling one of the properties would solve that problem, but selling one house hack for another of a similar price/cash flow isn't something I want to do.

Still fairly new to REI so any and all advise is greatly appreciated.

[AJ Wong]

Hi Joshua, DSCR refinances are possible. What is the loan to value (LTV) or mortgage balance compared to the assumed value?

Normally cash our DSCR on a two unit property will be limited to 75-80% 'cash out.' If you're not a W-2 employee or have additional income you can try an alternative income verification such as bank statement deposit averages or asset depletion (if you have significant reserves or assets.)

Lastly you could keep the primary mortgage intact and try a fixed second or HELOC but generally those are also full income verification. Check in with @Joseph Chiofalo he can walk you through investor loan options. Good luck!