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

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

Michael H.
New to Real Estate · Washington, DC · Member since 2021 · 4 posts · 2 votes

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?

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Adrian Lammersdorf-SciollBusiness Member
Realtor · FL · Member since 2020 · 227 posts · 101 votes
11mo

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.

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  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    11mo

    @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.

    0Reply
    • Michael H.
      OP
      New to Real Estate · Washington, DC · Member since 2021 · 4 posts · 2 votes
      11mo
      Quote from @Nicholas L.:

      @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.


       I agree I don’t think this should stop one from house hacking, I’m just thinking about future plans after the first house hack property.


      I am generalizing here, but would you agree that most of the time for most people it's harder to qualify for future househacks, considering the fact that most people use residential loans where debt to income ratio is probably the biggest factor in qualifying for a loan and the fact that DSCR or non owner occupied loans come at higher mortgage rates which would make most house hack deals not worth it to most people?

      0Reply
    • Daniel ToshevPro Member
      Rental Property Investor · Denver, CO · Member since 2020 · 29 posts · 16 votes
      11mo
      Quote from @Nicholas L.:

      @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.


           Well, the whole point of a househack is the low down payment and lower interest. If you have the 20-25% and couple extra points on the rate you don't need to househack. 

      .  I'm on my fourth and it does get more complicated. I sign a future dated (2-3 months) lease for the unit I'm currently living in before I go for pre-approval. Or rent out the extra bedrooms

      1Reply
  • Rick Albert
    Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    11mo

    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.

    1Reply
    • Michael H.
      OP
      New to Real Estate · Washington, DC · Member since 2021 · 4 posts · 2 votes
      11mo
      Quote from @Rick Albert:

      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.

      Makes sense, thanks
      0Reply
  • Kate Nixon Taylor
    Lender · Cary, NC · Member since 2021 · 122 posts · 29 votes
    11mo

    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

    0Reply
  • Michael Murphy
    Investor · Buffalo · Member since 2025 · 45 posts · 27 votes
    11mo

    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.

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  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    11mo

    @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. 

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    • Michael Murphy
      Investor · Buffalo · Member since 2025 · 45 posts · 27 votes
      11mo
      Quote from @Nicholas L.:

      @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. 

      Hey Nick.  I am an investor already.  I have 2 doubles.  Both of those have conventional 30-year fixed financing on them.

      I'm not knocking house hacking in general.  It seems difficult to beat for someone's first or second purchase.  My only point was that there were a lot of podcasts where people made it sound like you could just keep house hacking over and over indefinitely or at least up to a 10 loan max.  When I looked into the numbers it seemed like the DTI limits would catch up to you fairly quickly.  I've evaluated turning my primary residence into a MTR (it's across the street from a hospital) and house hacking to get an additional property.  The problem is that I am running into DTI constraints.

      I see your point about switching to DSCR loans.  I'm assuming you wouldn't be house hacking at that point though.  I don't think they would offer a DSCR on a primary residence and you wouldn't be getting access to the better LTV / rates that provide the value for the house hack.  Are you talking about moving prior house hacks to LLCs and refinancing with a DSCR to exclude it from your DTI?
      1Reply
  • Ken M.
    Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
    11mo
    Quote from @Michael H.:

    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?

    .
    There are 4 ways to buy more than a few houses under the current system
    1. Have lots & lots of money
    2. Creative Financing (unlimited houses, little money necessary)
    3. Be exceptional at managing properties, renters & risk
    4. Win the lottery and have lots & lots of money

    You could also team up with someone that has lots & lots of money, but that usually ends up with lots & lots of hassles.

    I chose creative financing and it's worked out very well for me. Other people do syndications, which requires some knowledge and money and yet others are exceptional managers and take a lifetime. I haven't met the guy who won the lottery, so I wouldn't count on that approach. 
    0Reply
  • Jimmy LieuBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
    11mo
    Quote from @Michael H.:

    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?

    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!

    [email protected]614-300-7535
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  • Adrian Lammersdorf-SciollBusiness Member
    Realtor · FL · Member since 2020 · 227 posts · 101 votes
    11mo

    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.

    [email protected]561-305-2404
    Thomas Lynne Realty527 Reviews
    WebsiteView Page
    1Reply
  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    11mo

    @Michael H., 

    It is opposite. House hacking usually helps rather than hurts future qualification. Lenders often count about 75 % of lease rent to offset the mortgage. Depreciation on Schedule E is a non cash expense that gets added back for DTI. Paper losses can lower taxes without lowering qualifying income. What can hurt is large current year repairs and vacancies. Capitalize improvements when allowed so the hit becomes depreciation. Keep leases rent deposits and clean bank trails. Allocate personal and rental expenses correctly. For 2 to 4 unit primaries lenders may use lease or appraiser rent schedule at purchase. Done right house hacking often improves DTI and terms.

    [email protected]941-914-7779
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  • Matt F.
    Rental Property Investor · St. Louis, MO · Member since 2019 · 162 posts · 72 votes
    11mo

    1. The concern you mention is not exclusive/specific to househacking. Any investment which affects DTI ratio would potentially factor in similarly depending on the specifics of the financing.

    2. When you reach an impasse on DTI ratio, many investors bundle their investments into a commercial loan/portfolio loan.  Assuming there has been appreciation, natural and/or forced, and assuming the properties are fully rented, there's likely to be a way forward that gets them out of your personal name. 

    3. I've never heard someone say, "House hacking really messed up my real estate investing career."

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