Can't get an owner occupied loan

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Can't get an owner occupied loan

Marissa Nestor
Property Manager · Big Sky, MT · Member since 2021 · 8 posts · 3 votes

Hello, Bigger Pockets!

This is my first post, and I am in the process of finding a lender for my first home purchase. Originally, I was looking for a "house-hacking" situation with either a small home + attached living space (basement apartment, etc), or renting out rooms in a home I own and occupy. 

A couple of issues I have ran into... I only have enough reserves for 97 conventional or FHA downpayment. The area I currently live/work in has absolutely no opportunity for a home in my price range. I live in Big Sky, MT and, per realtor.com "The median list price of homes in Big Sky, MT was $2.2M in August 2021, trending up 11.5% year-over-year.". The closest other towns are almost an hour away, and prices are steadily increasing out of my price range there as well. Due to this, I have began looking in nearby towns/counties. My preferred area is more north, about 3 hours away from where I am currently working. This means I'd live part time in Big Sky with my partner for awhile until finding a comparable job in that area. 

I spoke with a lender who said that due to my work not being full-time where I choose to buy, it would be hard to get anything under 10% down payment. I don't want to quit my current job, and find one in the other town, just to be denied a loan due to unsteady work history. I have been in my current job/role for a year.

Do I need to go back to the drawing board, keep a steady job in a market I want to buy in, and wait to purchase in a year or so? I'd like to start my real estate journey sooner rather than later, and in a place where I can be hopeful to land a home in, but should I also consider I may need a few more years of saving? Meanwhile, I am looking into any other creative options. 

As always, thanks for any advice or input!

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  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    4y

    @Marissa Nestor "Do I need to go back to the drawing board, keep a steady job in a market I want to buy in, and wait to purchase in a year or so?" - This. 

    Big Sky is a ski town for the rich and famous. What did you expect? I'd focus on the job, building a 6 months emergency fund, and saving for the future DP. Don't rush into a real estate purchase.

    0Reply
  • Anthoney Hanks
    Real Estate Broker · Forney, TX · Member since 2019 · 1k+ posts · 399 votes
    4y

    @Marissa Nestor, welcome to the BP community! 

    0Reply
  • Marissa Nestor
    OP
    Property Manager · Big Sky, MT · Member since 2021 · 8 posts · 3 votes
    4y

    @Jaron Walling You are exactly correct. My expectation was never to buy here, but to save money working here because the money making ability is higher (like you said, the rich and famous).. and that's exactly what I have done. My question is how do I relocate while trying to get an owner occupied loan, and not look like I have an unsteady work history due to quitting/relocating. Thanks for the advice!

    0Reply
  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    4y
    Originally posted by @Marissa Nestor:

    @Jaron Walling You are exactly correct. My expectation was never to buy here, but to save money working here because the money making ability is higher (like you said, the rich and famous).. and that's exactly what I have done. My question is how do I relocate while trying to get an owner occupied loan, and not look like I have an unsteady work history due to quitting/relocating. Thanks for the advice!

    You don't do both at the same time? It's really hard to get around lender requirements if you're working with conventional lenders. There are other avenues to get money for REI. If you can find a DEAL money will find you.

    0Reply
  • Keith Miller
    Developer · Missoula MT · Member since 2016 · 231 posts · 84 votes
    4y

    Did you talk to a commercial lender at a bank, or a mortgage broker? With your unique situation, I'd focus on talking to mortgage brokers, as they have a lot more flexibility since they can shop around your mortgage to different banks. I'd start with that, talk to Pat McGowen in Bozeman for a recommended mortgage broker, he runs the Bozeman Investing Meetup. 

    Then you may be able to find a fixer upper between Bozeman and Big Sky that you could house hack with, I still think that's a slam dunk strategy, if you can find a house in your budget. 

    0Reply
  • Bryce Allen
    Rental Property Investor · Milwaukee, WI · Member since 2016 · 62 posts · 28 votes
    4y

    Simply put you’re priced out of Big Sky with little hope of ever purchasing. Some inventory will be coming online up there but it’s going to get snatched up quick. “The billionaires are pricing out the millionaires.” IMO save and look at Four Corners. It’s going to see growth and included in that is “affordable housing”. It’s not going to happen overnight but it is happening. 

    In November I spent the day with the CFO of the group that owns/is developing everything in BS. There’s going to be a continued sever lack of workforce housing on the mountain. Their development plans are gigantic. The YC already can’t house all of their employees, they have them in Bozeman at hotels and are building in BS and at the GGI to house them. 

    Workforce housing makes zero sense on the mountain due to the value of the land. They’re going to build some token housing, but you’d have better luck with a lottery ticket than snatching one of those units. Four Corners isn’t the prettiest area, but it cuts down the drive by at least 20min from BOZ. 

    IMHO adjust your expectations, accept you can’t afford to live on the mountain, find the next best thing, and focus on that. Good luck! 

    0Reply
  • Justin WindhamPro Member
    Banker · Nationwide · Member since 2015 · 4k+ posts · 1k+ votes
    4y

    @Marissa Nestor

    Welcome to Bigger Pockets!

    You’ll find plenty of friendly, knowledgeable people willing to respond to your posts.

    The site has quite a few tools that can be helpful for new members. For example, if you are looking to connect with other members near you, want to learn from people in a specific area you’d like to invest in, or have a desire to find people interested in certain topics, you could use the search feature here: https://www.biggerpockets.com/search/users


    I really like the alerts feature that can quickly guide you to current topics that may be of interest: http://www.biggerpockets.com/alerts

    0Reply
  • Marissa Nestor
    OP
    Property Manager · Big Sky, MT · Member since 2021 · 8 posts · 3 votes
    4y

    Thank you for your replies!

    I spoke with a mortgage officer local to Missoula. I am not looking to buy in Bozeman, Four Corners, or Big Sky area. I do, however, currently work here. I have worked and lived locally in Big Sky for the past 4 years, so I am very in the loop with the crisis and employee housing shortage/developments. In these past few months, I have found a way to transition to remote work within the same company I work for. This will allow me to have flexibility on location with an owner occupied loan. 

    Thank you for your time!

    Marissa

    @Bryce Allen

    @Keith Miller

    0Reply
  • Account Closed
    Specialist · Bozeman, MT · Member since 2016 · 237 posts · 153 votes
    4y

    Conforming loan limits have gone up, what is the price range you were looking at? Should be able to do 5% down if you're under the $650k mark, with good rates. I know that's a stretch, but totally doable in our market. But you should be thankful, on a non-owner occupied investment property, rates are going back up to 4.5-5%+, and 25% down minimum sometimes 30%, and 6 months of reserves. At that point, once all those ducks are in a row, you will need to compete for an accepted offer. I have put in offers $15k over asking for clients, and they got rejected. This may be one of the toughest markets to break into.

    0Reply
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