Getting Financing for a Second House Hack

4 Replies

Hi Everybody,

I’m a new investor who purchased his first single family home in June 2021. I purchased it with my twin brother and we are looking to get another home in the next 6-12 months in the Sacramento market. We used a Conventional loan and put 3% down. Both of our names are on the property.

My question is how can I get a 2nd loan to house hack a property as a primary residence? Is it possible for either me or my brother to stay in the first home we purchased while the other person gets another home and used that has a primary residence. So essentially there would be both our names on the first property and only one of our names on the second property.

Any advice would be greatly appreciated 😁

@Ishmeal Ivory you’d need to look at the fine print within the first property’s mortgage docs, normally you have to live in the property for at least one year as your primary residence. After that then you could get a new primary mortgage loan. You’d have been better off not having the first home in both your names, rather just one and the other property in the other’s name.

Hey Ishmeal- on securing your first house hack! I love the energy and proactiveness that you and your brother are showing by wanting to jump into another one. As @Brendan Miller flagged above, the tricky part will be the financing. 

My guess is that you guys secured a loan to include both of your incomes and credit. On the new home, because of how title is currently held with both of your names on it, you would more than likely find yourself having to put down at minimum 15%-25% if you're staying within the same market as it would be viewed as an investment property and not a primary residence; as your existing "primary residence" that you're on title for, would be to close geographically close to pass the smell test on a new primary residence loan. 

This all being said, there's a couple of options, if either of you can carry the loan on your own, then it would benefit you to ask your lender what the geographic distance would need to be in order for you to qualify for a second/vacation home loan. This loan product will require a higher down payment of 10% but allows you to avoid the 15-25% that would be required with a straight investment loan. 

We were able to use this latter strategy for a client who wanted to keep his current home to rent to his daughter's while buying a new home with an ADU for his mother-in-law. We were fortunate to find their new home just outside of the required distance to qualify them for a second home loan rather than having to purchase it as an investment property.

Another route would be to pull whoever is purchasing the new home off of the existing home's title to have them try to qualify for a new primary residence loan. Either way, it may take at least 6 months to a year for the loan or the title change to season before you'd be able to take any concrete steps. Hoping this helps. Best of luck and don't hesitate to reach out if you have any questions. 

@Eduardo Aguilar

Wow so much knowledge in one message! Okay that’s awesome. Like you said I do intend on waiting 6 months to a year but I will look into the second home/ vacation property. I’m aware that the down payment would be higher and that shouldn’t be that much of problem considering the fact that I’m not paying and rent or utilities thanks to house hacking with my brother.

I will follow up with you when I have enough saved for a 10% -15% down payment for a second home within the same area of my first home.

Thank you Eduardo! 😁