Does househacking make it more difficult to buy future residential real estate?

Question

If you do the math, even best case scenario in househacks where you are profiting $1-2k per month, your debt to income ratio is still increasing (assuming your W2/1099 dayjob income is about the same). So when you are qualifying for future mortgages, lenders will find you less desirable because you're increasingly getting more leveraged and your debt to income ratio is increasingly getting worse. So you will likely get worse terms, if even approved for a loan. Am I missing something here or is it indeed the case that househacking makes it harder to qualify for future residential real estate?

Adrian Lammersdorf-Scioll · Answer

I've done 2 house hacks as well now.  With FHA being very generous on DTI, I wouldn't worry about it.  I qualified for my 2nd one even without having my first place be rented out.

Rick Albert · Answer

I've done two house hacks and invest out of state. You're fine.

It's all about the debt to income ratio. As long as you meet it, you can have generally up to 10 loans (each lender is different) unless you go the DSCR route.

Talk to lenders about this. They will be your best resource.

Kate Nixon Taylor · Answer

When you move out, your income from that property will be factored into your DTI, so that helps with making more space for the next house hack. Once you max out your DTI, you can refinance rentals off your DTI that make sense with DSCR or buy properties from there with DSCR products. The rates for DSCR aren't that much higher than conventional if you have a good credit score, so manage your credit well and you will find those rates approachable.

Always happy to connect and run scenarios! Cheers, Kate

Michael Murphy · Answer

I've wondered the same thing.  On the BP podcast people talk about doing 10 of them with 3.5 to 5% down and I don't see how the math works.  For the DTI calculation my understanding is that they take 75% of rent received to calculate your income.

Let's say you buy a place at the 1% rule.  That is going to generate 12% of the purchase price in rent.  75% of that would bring you to 9%.  If you put a full 20% down and financed it at 6% interest it would be 4.8% of the purchase price.  That deal would already be over 50% DTI.  Sure, W2 income will offset it, but it is a dilutive deal.

A lot of the people that used that strategy were doing it when rates were much lower and rents increased dramatically.  If I'm borrowing at 3% and raised rents 20% while living in the place then the math works.  Or, if you can acquire the place at a deep enough discount to get 2% or 3% of the purchase price in rents then it works.

Maybe I'm missing something.

Nicholas L. · Answer

@Michael Murphy

hello.  are you already an investor?  i think some of what you said is accurate - prices and rents were previously increasing faster than they are likely to do over the next few years, which had a buoying effect that should no longer be counted on.

so yes, the ideal situation is: interest rates are stable or falling, rents are increasing, and your own personal W2 income is increasing.  without that, though, there are still options, like using DSCR loans, and also knowing the rent is going to increase when you move out.

and the goal here is not any "rule" but: building equity.  equity is wealth.

Jimmy Lieu · Answer

Hey Michael, good question and it’s something a lot of people overlook when getting into househacking. In most cases, lenders don’t just look at the debt side—they also factor in the income from the property. So if the property is rented out or has strong rent potential, they’ll often use a portion of that income to offset the debt when calculating your DTI, which can actually help rather than hurt your borrowing power. How much of the rental income they count depends on the lender and the loan product, but typically they’ll use somewhere around 70–75% of the documented rental income to offset the mortgage. So while your total debt does increase, your qualifying income can increase too, which can keep your ratios in check or even improve them if the deal cash flows well. It’s not automatic or guaranteed—you do need solid documentation—but househacking doesn’t necessarily make it harder to qualify for future loans. Happy to connect and answer any questions you have!

Nicholas L. · Answer

@Michael H.

it's going to be heavily dependent on your personal situation, and the requirements of an individual lender, but yes, it could make it more difficult to qualify for conventional lending.

with that said, a lot of us use DSCR loans and there, your DTI ratio is not a factor.

so i wouldn't let this be a blocker to house hacking.  it's a powerful way to build wealth.

Does househacking make it more difficult to buy future residential real estate?

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