Boston, MA · Member since 2022 · 10 posts · 8 votes
I am looking to do a house hack for my first investment. Ideally, I can have my parents cosign and we can go in together on a duplex. Alternatively, I can try to get a DSCR loan on a tri or quad that cash flows sufficiently to qualify for the loan. I want to talk about this second option with a little twist.
Obviously the challenge with a DSCR loan in an owner occupied property is you lose out on the income of one unit, which makes it hard to qualify for the loan. So, what I am thinking is doing something like a reverse house hack, where I fill the whole unit with tenants after buying with a DSCR loan, and then refinancing into a traditional loan later and moving into one of the units [to get the benefit of a house hack, saving money on rent while building equity]. Any thoughts on this?
Investor · Colorado Springs, CO · Member since 2018 · 261 posts · 233 votes
3y
What a creative solution!
A potential issue though is that DSCR likely requires 25%+ down (I would imagine). A HUGE benefit of using conventional/FHA as a owner-occupant is that you can put 5% down on a single-family or 15% down on a duplex.
I'd be interested to hear from a DSCR lender though to see if any offer 15% down (or less) products.
I am looking to do a house hack for my first investment. Ideally, I can have my parents cosign and we can go in together on a duplex. Alternatively, I can try to get a DSCR loan on a tri or quad that cash flows sufficiently to qualify for the loan. I want to talk about this second option with a little twist.
Obviously the challenge with a DSCR loan in an owner occupied property is you lose out on the income of one unit, which makes it hard to qualify for the loan. So, what I am thinking is doing something like a reverse house hack, where I fill the whole unit with tenants after buying with a DSCR loan, and then refinancing into a traditional loan later and moving into one of the units [to get the benefit of a house hack, saving money on rent while building equity]. Any thoughts on this?
Thanks!
You could do that. Make sure you take the prepayment penalty into consideration and refinance out of it before you occupy it to avoid mortgage fraud, but lots of lenders allow "lives with family" as a substitute for a primary residence mortgage history.
Lender · Fort Worth, TX · Member since 2022 · 88 posts · 37 votes
3y
@Cameron G. If you plan on living in one of the units, then a DSCR loan is off the table. Those loans are strictly Business purpose and you will be required to sign documents stating that neither you nor an family member will use the property as a primary residence as loan as that loan is in place. for a house hack on a tri- or four-plex, I recommend looking at an FHA loan. You can get into the property for 3.5% down and you only need to live in one of the units for the first year after closing.