DTI House Hacking

[Jose N.]

Hi All,

I've worked for a non-profit my entire professional career (ie, my W2 income is not very high).  I lucked out on my first house which has turned out to be a great AirBnB side hustle and in 2022 I was fortunate enough to secure a second property has a house hack (which I've implemented as a furnished mid-term rent by the room). In my area, I've found this to be the best model (at least up until this point). Even though I have it with a minimum 3 months commitment, my current tenants have been there more than 6 months and have signed another lease.

I'd love to purchase another property every year for the next few years but have hit a snag with DTI. It seems like "most" lenders (at least the ones I've talked to) don't like the idea of rent-by-the room on a primary ... so they can't count my income on that particular property and they are requiring a 1 year lease on the whole house instead of multiple mid-term leases ... so essentially they want a long term lease. My issue with that request is that if I convert the house to a long term, I'd lose at least $600/month of income vs the mid term model I currently have.

All that said, my DTI sits at 58% with the models they use. What strategies have you all employed to lower DTI and meet lender requirements? Looking forward to any suggestions.

[Perry Farella]

I have a friend who does 12 month leases for all his bedrooms in all his investment properties. Never a problem using that income from conventional Underwriting. Have you thought of converting everyone to 12 month leases ?