House Hacking Options

[Jacob Lockard]

Hello everyone. I have been getting educated on buying my first property and am interested in house hacking.

I bought a home in 2020 and have a decent amount of equity around $100k. I am considering renting my home and purchasing a duplex or fourplex and living in one of the units. Since I already have a home loan, what are my odds of getting a second loan for an investment property? I understand that I could get an FHA loan at a lower rate and put 3.5% down, since I'll be living at the property. I'm not sure if I should do that or try for a home equity loan, or borrow more to reduce the monthly payments. It's enticing to try for FHA and pay less upfront. I am curious what I should be looking out for. Any help or pointers would be appreciated. Thanks!

[Jacob Henshaw]

Another consideration (in addition to the great advice above) is the HELOC will also factor into your DTI on the next home purchase loan. One way to limit the impact that the HELOC has on the DTI is to obtain an interest-only HELOC product. In my experience, lenders will use that interest only amount for qualification on the next purchase. In my case, I obtained a 100% LTV, interest-only product from a local credit union (NC). In qualifying for the next home purchase, I disclosed that I would be using HELOC funds for the next purchase. They calculated DTI based on that information that I provided. Of course, be sure to keep all closing documentation from the HELOC as that will be needed on the next home purchase qualification.

I just went through this process in summer of 2022, for what it is worth. 

Let me know if you have any questions about this - happy to chat.